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 9.72% during the week of trade leading up to Tuesday 9th. August; to register a net long position of 29,699 Lots on the day. This net long position which is the equivalent of 8,419,535 bags has most likely been marginally decreased, following the period of mixed but overall more negative trade which has since followed.
The International Coffee Organisation have announced on Friday that they have revised lower their global coffee production for the present October 2015 to September 2016 coffee year by 0.97%, to now record this present coffee year’s production at 143.3 million bags. The major influence on this revised lower figure being related to the ICO having reduced the Mexican production by 1.1 million bags from their earlier figure of 3.9 million bags, to now record the Mexican production at 2.8 million bags.
This official International Coffee Organisation figure is however significantly lower than the many trade and industry reports that are closer to 149 million bags and even more dramatically lower than the 153 million bags reported by the well-respected U.S.A. Department of Agriculture, which seemingly assisted to negate the effect of this ICO report upon market sentiment on Friday. But one has to excuse the ICO from being somewhat conservative in its production figures as this organisation is obliged by the nature of its official capacity to apply the official numbers provided by its individual producer member states, with many producers tending to forward often unrealistic official figures.
The International Coffee Organisation have also reported on Friday that they assess global coffee consumption for last year to have been 152.1 million bags and therefore 1.26% higher than the previous year, to perhaps indicate global coffee consumption for this year to be close to 154 million bags. This figure is close to many private trade and industry assessments of global coffee consumption, but the real question is in terms of this number is that with consumer coffee stocks seemingly more than adequate at present, what shall be the global coffee supply for the coming October 2016 to September 2017 coffee year.
Presently global coffee supply for the coming coffee year is looking to be close to 154 million bags, to indicate that with unforeseen negative climatic issues aside, that global coffee supply shall be sufficient for the coming coffee year. But critically the forthcoming global coffee supply is not indication much in the way of a contribution to the rebuilding of global coffee stocks, which might be seen a good reason to believe in a degree of coffee market stability and buoyancy for the medium to longer term. This close to even supply and demand status of the coffee markets at present, underlines the importance of the possibility of a new La Nina phenomenon within the Pacific Ocean for the last quarter of this year and into the first quarter of next year, as if this phenomenon does prove to be reality and comes to the fore with any intensity, it would tip the global coffee supply into a deficit status. Thus the La Nina shall continue attract attention, for the coming months.
The November to December contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 57.12 usc/Lb., while this equates to a 40.70% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, continues to inspire support for the robusta coffee sector of the industry.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 500 bags on Friday; to register these stocks at 1,283,476 bags. There was meanwhile a smaller in volume 1,710 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 15,760 bags.
The commodity markets with flat economic data coming to the fore from Europe, China and Japan were mostly on a negative track on Friday, but with the Oil markets benefiting from the hint of some price support due to come from Saudi Arabia bucking the trend for the day. Thus assisting to provide a degree of hesitant buoyancy for the overall macro commodity index, for the day. The Oil, Natural Gas and Sugar markets had a day of buoyancy, while the Cocoa, Coffee, Cotton, Copper, 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 0.22% lower; to see this Index registered at 419.37. The day starts with the U.S. dollar near too steady and trading at 1.292 to Sterling and 1.116 to the Euro, while North Sea Oil is showing a degree of follow through buoyancy in early trade and trading at 45.75 per barrel.
The London and New York markets started the day on Friday on a hesitantly steady note and to take a steady sideways track into the early afternoon trade, but as the afternoon progressed both markets came under pressure and headed back into negative territory and despite bouncing off the lows and heading back towards par, once again came under pressure in late trade and to take a modestly negative track into the close of the day and the week. The London market ended the day on a negative note and with 75% of the earlier modest losses of the day intact, while the New York market ended the day on a likewise negative note and with 69.6% of the earlier losses of the day intact. With many countries in Europe on holiday today for the Catholic Assumption Day Holiday and therefore many industry buyers off the field of play for the day, one might expect to see a very quiet start and following the soft close on Friday, little better than a hesitantly 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.
SEP 1803 – 5 SEP 136.85 – 0.85
NOV 1835 – 6 DEC 140.35 – 0.80
JAN 1854 – 6 MAR 143.55 – 0.85
MAR 1865 – 6 MAY 145.45 – 0.85
MAY 1877 – 6 JUL 147.15 – 0.90
JUL 1891 – 6 SEP 148.75 – 0.90
SEP 1903 – 6 DEC 150.90 – 0.95
NOV 1916 – 6 MAR 153.00 – 0.95
JAN 1925 – 6 MAY 154.15 – 1.05
MAR 1932 – 6 JUL 155.15 – 1.10
