Coffee Market Report
| The latest Commitment of Traders report from the New York arabica coffee market has seen the Non Commercial Speculative sector of this market decrease their net short sold position within the market by 11.87% during the week of trade leading up to Tuesday 14th. July; to register a net short sold position of 23,343 Lots. This net short sold position which is the equivalent of 6,617,637 bags has most likely been slightly increased again, over the period of mixed but overall marginally negative trade which has since followed.
The Brazil coffee export house Comexim have assessed that Brazil has reduced its coffee stocks by 7.2 million bags over the period of July 2014 to June 2015, to see the country with its new crop now peaking carry over a much lower 5.1 million bags into the new crop, as at the 1st of this month. These stocks they appropriate to approximately 3.5 million bags of farm and trade stocks and with an added approximately 1.6 million bags, of state owned federal stocks. The inference of this report has to be the bout of new crop forecasts for Brazil of which some talk in excess of a new crop of in excess of 52 million bags, but even a more conservative figure of 51 million bags once added to these stocks, would indicate a potential coffee supply of in excess of 57 million bags through to the next 2016 crop. This would indicate a surplus supply of approximately 3 million bags and with some early forecasts presuming that with normal weather conditions for the last quarter of this year and the first quarter of next year a new 2016 Brazil crop of in excess of 60 million bags, there is presently no reason for concern over medium to longer term Brazil coffee supply. This factor accompanied by the prospects for increasing new crop coffee supply from Vietnam, Central America and Colombia for the last quarter of this year and into the first quarter of next year, is tending to support the speculative bears within the market. This bearish sentiment perhaps even more significant in terms of the London robusta coffee market, which as the prospects of a surge of pre new crop internal market coffee stocks due to come to the market over Augusta and September, with these stocks a result of the prevailing price resistance that has slowed sales of coffee within Vietnam over the last six months. The arbitrage between the markets broadened on Friday to register this at 52.42 usc/Lb., while this equates to a 40.83% price discount for the London robusta coffee market. This arbitrage remaining relatively to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact upon the fortunes of the London market. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 14,848 bags on Friday; to register these stocks at 2,140,272 bags. There was meanwhile a smaller in volume 235 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 2,880 bags. One might think that the relatively low certified coffee stocks held against the New York market would be supportive for speculative sentiment within this market, but this is seen to be a result of price resistance within the arabica coffee producer countries that has inflated export differentials and priced coffees well above tenderable parity, rather than a shortage of available arabica coffee. Thus the low stock levels are being largely ignored and players are rather looking towards the pending rise in medium to longer term arabica coffee supply than to the prevailing stock levels, to see this market remain within its relatively low and soft trading range. The commodity markets remained lacklustre in nature on Friday and with the overall macro commodity index tending softer through the day, to see the majority of the markets drifting back to lower value. The markets mostly devoid of striking fundamental news, while with the northern hemisphere within the summer holiday season, there are many players presently distracted by the holiday spirit. The Brent Oil, Natural Gas, Orange Juice and Soybean markets had a steady day, while the U.S. Oil, Sugar, Cocoa, Coffee, Cotton, Copper, Wheat, Corn, Gold, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.69% lower: to see this Index registered at 417.20. The day starts with the U.S. Dollar showing early buoyancy and trading at 1.559 to Sterling and 1.083 to the Euro, while North Sea Oil is steady in early trade and is selling at 56.50 per barrel. The London and New York markets started the day on Friday with both markets taking a modestly softer track and with both markets maintaining this track into the afternoon trade, but while the New York market managed to remain close to par, the London market started to come under further pressure and extended its losses. The New York market did briefly bounce off its lows later in the afternoon but the recovery was not sustained and the market slipped back below par, while the London market took a somewhat sideways track near to the lows of the day. The London market continued to end the day on a soft note and with 81.1% of the losses of the day intact, while the New York market ended the day on a modestly softer note and with only 30% of the earlier losses of the day intact. This close is hardly likely to inspire and with a relatively strong U.S. dollar in play, one might expect to see little better than a near to steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1796 – 40 JUL 127.00 – 0.45 |
