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 18.19% during the week of trade leading up to Tuesday 23rd. February; to register a net short sold position of 16,654 Lots. This net short sold position which is the equivalent of 4,721,335 bags has most likely been further increased, following the period of mixed but overall mostly negative trade, which has since followed.
The Coffee industry is building up to the International Coffee Organisations 4th. World Coffee Conference, which is being hosted by Ethiopia from the 6th. to the 8th. March and with activities planned to carry on to the 11th. March. But one might expect some degree of despair to be voiced by the majority of the producer delegates attending this conference, as producers try to work through the prevailing soft trading range of the coffee terminal markets, which impact negatively as reference prices for physical sales. Besides the focus on the get together in Addis Ababa next week, there remains nothing in the way of striking fundamental news coming to the coffee markets, with producers in general unable to generate anything in the way of supportive news for the markets. Especially so now, as with the El Nino phenomenon now on the wane and world climatic conditions tending to return to normal and aside from the damage done to the potential for coffee production within Indonesia and for the mid-year Mitaca crop in Colombia which are factors that have already been discounted by the markets, there really is no more weather related threat to the short to medium term world coffee supply. But one might perhaps comment that the evidence of the steadily declining certified stocks of the New York market that confirm that despite reasonably good volumes of new crop coffee supply, that coffees are not available to the markets at tenderable parity prices that the markets are perhaps below reality. This factor very evidently confirms that consumer industry buying interest is sufficient for the majority of the arabica coffee producers to continue to find a home for their coffees at prices that are at premiums to the reference prices of the terminal market, which would indicate that while short term supply is not necessarily that tight at present, there is not such a surplus to justify the extent of the bearish sentiment within this market. But the funds do always have a greater agenda and for the present, one might not expect the fundamental factors of coffee demand and supply to be able to counter the soft trading range that both the coffee terminal markets are taking. The May on May contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 53.24 usc/Lb., while this equates to a 46.22% 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 501 bags on Friday; to register these stocks at 1,554,263 bags. There was meanwhile a larger in volume 1,849 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,840 bags. The commodity markets were mixed and with most coming under pressure on Friday with the firming of the U.S. dollar, but with some hesitancy on the part of the bears within the markets, against improved economic forecasts from the U.S.A. and the prospects for further state sponsored stimulus within China. The Oil and Copper markets had a day of buoyancy and the London robusta Coffee market was near to steady, while the Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, 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 0.54% lower; to see this Index registered at 366.40. The day starts with the U.S. Dollar steady in early trade and trading at 1.387 to Sterling and 1.094 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at 34.90 per barrel. The London market started the day on Friday on a steady note and with the New York market experiencing some modest buoyancy and with both markets taking this track through to the afternoon trade, when the New York market started to come under some pressure and to take the market back into negative territory. The London market continued for the rest of the day to take a sideways track either side of par but mostly showing some modest buoyancy, while the New York market and with the negative influences of the soft nature of the overall macro commodity index in play, maintained its softer track for the rest of the day. The London market continued to end the day on a modestly softer note but having recovered 75% of the earlier losses of the day by the close, while the New York market ended the day on a soft note and with 95% of the earlier losses of the day intact. This rather disappointing close for the New York market and near to the lows of the day and with the U.S. dollar maintaining its muscle for the present does little to inspire and one might expect to see little better than a near to steady start for early trade today against the prices set on Friday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. MAR 1326 – 3 MAR 113.00 – 1.65 |
