Coffee Market Report
| There was apparently muted price fixation selling activity out of Vietnam for the London robusta coffee market yesterday, which assisted to buoy the market in line with the positive influences of the excitement that came to the New York market. There are however now only approximately six days of trade left before the farmers and traders in Vietnam start to close shop to head into the ten days of Tet New Year holidays and thus, one might expect to see some pre-holiday volumes of selling still to come to the market, which will create something of a short term ceiling for the fortunes of the London market.
The well-respected commodity bank Rabobank within their Agricultural Commodities Monthly review have revised lower their forecast for the New York arabica coffee prices for the first quarter of this year yesterday, to bring their foreseen value down from 133.00 usc/Lb. to 123.00 usc/Lb. This report, tending to underpin the generally bearish sentiment that prevails within the coffee markets, where speculative spirts have been further dampened by the negative nature of the macro commodity index. Meanwhile though the more volatile and speculative in nature New York arabica coffee market which many have seen to be over sold, attracted good volumes of short covering in yesterday’s trade. The evidence of this in terms of more specific volumes is however only really due to come to the markets the week after next, when the commitment of traders report for Tuesday 2nd. February shall come to the fore. There are however still a further four days of trade up to this date, which shall result in further adjustments up or down for the net short sold position of this market. The March on March contracts arbitrage between the markets broadened yesterday, to register this at 53.97 usc/Lb., while this equates to a 45.66% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, with the good discount most likely due to remain in place for the foreseeable future, in line with steady robusta shipments out of Vietnam. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,953 bags yesterday; to register these stocks at 1,611,074 bags. There was meanwhile a smaller in volume 1,132 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 35,608 bags. These Certified stocks including a 41.54% contribution from Mexico and Central America, a 25.32% contribution from Colombia, a 16.92% contribution from Peru, a 14.54% contribution from Africa (Burundi, Rwanda, Tanzania and Uganda) and a 1.68% contribution from India. Thus to see as is tradition, the Latin American coffees dominating the certified stocks of the New York market. The distribution of these stocks is meanwhile dominated by the certified warehouses of the exchange in Europe, which account for 70.99% of the stocks. Whereas the balance 29.01% of the coffees are held within the U.S.A. based warehouses of the exchange, which also only account for 24.62% of the coffees pending grading for the exchange. The commodity markets were in receipt of the news that the Federal Reserve Bank in the U.S.A. are after all not likely to raise interest rates in March, but with speculation that this is just a delay and that there are likely to be a couple of rate hikes due for the second half of the year. Thus in terms of currency and the muscle of the U.S. dollar it is business as usual, with the commodity markets mostly focused on the concerns of damp medium term demand from the all-important Chinese market, but with the recovery of the fundamentally in terms of production costs undervalued Oil markets assisting to buoy the overall macro commodity index for the day. The Oil, Natural Gas, Coffee, Copper, Corn and Soybean markets had a day of buoyancy, while the Sugar, Cocoa, Cotton, Orange Juice, Wheat, Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% higher; to see this Index registered at 367.28. The day starts with the U.S. Dollar steady in early trade and trading at 1.425 to Sterling and 1.088 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 32.35 per barrel. The London and New York markets opened the day yesterday on a hesitantly steady note and maintained a mostly positive over par track into the afternoon trade, but with the New York market attracting short covering support and attracting good volumes of buy stops to accelerate the gains, the London market likewise added value to its earlier modest gains. The New York market did however run out of steam later in the day and with price fixation selling and some day trade profit taking in play, came back significantly from the highs, while the London market likewise lost some of its new found muscle. The London market continued to end the day on a positive note and with 76.5% of the earlier gains of the day intact, while the New York market ended the day on a more modestly positive note and with only 41.7% of the earlier gains of the day intact. This close with the markets dipping back from the highs of the day and with the technical charts uncertain, is likely not to inspire any excitement and one might expect to see small volumes of price fixation selling coming into play for early trade today, to perhaps result in a steady to softer start for the day against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JAN 1367 + 26 MAR 118.20 + 1.50 |
