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 long position within the market by 67.12% during the week of trade leading up to Tuesday 26th. April; to register a net long position of 1,807 Lots. This net long position which is the equivalent of 512,276 bags has most likely been further reduced and possibly moved back into a net short position, following the period of mixed but mostly negative trade, which has since followed.
With the month of April passed the government trade data from Sumatra the leading coffee producing island within Indonesia have reported that the islands robusta coffee exports for the month were 303,441 bags or 79.18% lower than the same month last year, at a total of 79,770 bags. This dip in exports has contributed to the islands cumulative robusta coffee exports for the first seven months of the present October 2015 to September 2016 coffee year to be 918,531 bags or 338.31% lower than the same period in the previous coffee year, at a total of 1,478,964 bags. This dip in exports is both related to the prevailing price resistance to the relatively soft nature of the reference prices of the London robusta coffee market and to the dip in internal coffee supply, which is expected with a more modest El Nino dry weather affected new crop, to remain relatively tight for the coming months. However with the good supply of robusta coffees out of Vietnam which had record carryover stocks into its 2015 yearend new crop, there is no concern on the part of the consumer markets over longer term robusta coffee supply. However with the diminished robusta coffee supply out of both Indonesia and Brazil where the new conilon robusta coffee crop is seen to be significantly lower, the Vietnamese who hold most of the cards in terms of robusta coffee supply are able to demand premium price differentials for their robusta coffee exports. In this respect, the prevailing premium prices being dictated by the price resistance within the internal market, where farmers and internal traders knowing that they lack significant international competition, continue to hold back for better value from the mills and exporters. Meanwhile in terms of West African robusta coffee supply and with the Ivory Coast dominating this supply, the country has reported that their exports for the first three months of this year and up to March 2016 were 88% higher than the same period in the previous year, at a total of 272,183 bags. This remains a relatively modest number, in terms of the forecasts for the Ivory Coast to export 1.6 million bags of robusta coffee during the present October 2015 to September 2016 coffee year. The July on July contracts arbitrage between the London and New York markets broadened on Friday, to register this at 49.47 usc/Lb., while this equates to a 40.72% 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 4,680 bags on Friday; to register these stocks at 1,381,386 bags. There was meanwhile smaller in volume 2,569 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 320 bags. The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 0.87% during the week leading up to Monday 25th. April, to see these stocks registered at 2,776,500 bags. These stocks with the prices for robusta coffee exports worldwide remaining positive to tenderable parity, are likely to continue to steadily decrease for the foreseeable future. The commodity markets were generally buoyed by the softer nature of the U.S. dollar on Friday, but with the Oil markets experiencing a modest reversal, albeit that the overall macro commodity index did nevertheless have a positive day. The Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Corn, Soybean, Gold and Silver markets had a positive day’s trade, while the Oil, Orange Juice and Wheat markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.18% higher; to see this Index registered at 409.11. The day starts with a close to steady U.S. Dollar which is trading at 1.460 to Sterling and 1.146 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at 45.95 per barrel. The London and New York markets had a relatively steady start on Friday, but with both markets coming under pressure and dipping back into negative territory in early afternoon trade. The dip was however short lived and with the added influence of the relatively soft U.S. dollar and with the Brazil Real trading at a relatively firm 3.45 to dollar, both markets regained their buoyancy and moved back into positive territory and took a positive stance through to the end of the day’s trade. The London market ended the day on a positive note and with 83.3% of the earlier gains of the day intact, while the New York market ended the day on a modestly positive note and with only 26.8% of the earlier gains of the day intact. The London market shall be closed today of the Bank holiday long weekend and so too will many producer and consumer markets be taking a holiday today to celebrate yesterday’s weekend May Day holiday, to leave the New York market to trade solo for a shortened day’s trade. One might however expect little excitement for the New York market and especially so as the market struggled to hold onto its Friday gains and to see perhaps only a steady start for early trade today against the prices set on Friday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. MAY 1556 + 14 MAY 120.85 + 0.45 |
