Coffee Market Report
The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market raise their net long position within this market by 14.38% over the week of trade leading up to Tuesday 12th.October; to register a new net long position 52,206 lots. Meanwhile the longer term in nature Index Fund sector of this market raised their net long position within the market by 0.68%, to register a net long position of 55,050 Lots on the day.
Over the same week, the Non-Commercial Speculative sector of this market increased their net long position within the market by 8.37% to register a new net long position 47,618 lots, which is the equivalent of 13,499,492 bags. This net long position has most likely been little increased further following the period of mixed but overall firmer trade that has since followed.
The historical Brazil weather data and in particular, soil moisture levels through the summer rainfall months of October through to February this past year, have been reported by sources accumulated by Refinitiv, to be on average 58.60mm below the levels at the same time last year of 229.50mm in the top 0-1.6m of soil. The arrival of spring rain season this year has thus far produced positive rainfall figures, and weather reports continue to indicate a widespread rainfall across the vast majority of the Brazil coffee growing areas. A continuation of the seasonal rains that have been reported across the vast areas of the Brazil arabica coffee growing regions, will assist to improve soil moisture levels before the summer heat season starts.
The November-to-December contract arbitrage between the London and New York markets narrowed yesterday to register this at 106.21 usc/Lb. This equates to 52.68% price discount for the London Robusta coffee market. This wide arbitrage will likely be viewed by price sensitive roasters as an attractive alternative discount for robusta against the comparatively higher value arabica coffee.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 845 bags yesterday, to register these stocks at 1,921,255 bags, with 95.44% of these certified stocks being held in Europe at a total of 1,833,713 bags and the remaining 4.56% being held in the USA at a total 87,542 bags. Of this, a total 1,044,440 bags, or 54.36% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.57% of these certified coffees, originating from Honduras. There was meanwhile a decrease of 3,615 bags to the number of bags pending grading to the exchange; to register 56,477 bags pending grading on the day.
It was a softer day on the commodity markets yesterday, as sentiment within the financial markets remained weak with the world’s second largest economy, China showing signs of slow economic growth. The Cocoa, Wheat, Soybean, Oil and Corn markets ended the day on a positive note, while the Sugar, Coffee, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.377 Sterling, at 1.165 the Euro and with the US Dollar buying 5.512 Brazil Real.
The New York market started the day yesterday trading on a modest softer note, while the London market started the day yesterday trading on a modest near to par, positive note. Both of the markets gained momentum early to see the New York and London markets trend firmer to hit a ceiling for the day’s trade, limiting the gains for the day. As the afternoon progressed the markets dropped back from the highs of the day to see both the New York and London markets set on a softer path for the late afternoon session, the markets rebounded somewhat from the lows of the day to see both the New York and the London markets settle on a softer note at the close.
The London market ended the day on a negative note and with 53.85% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 63.16% of the losses of the day intact. This follow through softer close does little to indicate direction nor does it inspire confidence, albeit that the markets recovered some of earlier losses of the day, one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
NOV 2103 – 7 DEC 201.60 – 1.80
JAN 2115 – 6 MAR 204.35 – 1.90
MAR 2070 – 14 MAY 205.35 – 1.90
MAY 2040 – 17 JUL 205.90 – 1.90
JUL 2032 – 18 SEP 206.20 – 1.90
SEP 2033 – 20 DEC 206.30 – 1.90
NOV 2036 – 22 MAR 206.45 – 1.90
JAN 2043 – 22 MAY 206.65 – 1.90
