Coffee Market Report
Apologies but we got caught by spell check on Friday in terms of making note that Cooxupe have foreseen that biennial bearing factors (not biannual) shall contribute to a smaller Brazil arabica coffee crop, for the coming year.
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 17.74% during the week of trade leading up to Tuesday 16th. August; to register a net long position of 24,428 Lots on the day. This net long position which is the equivalent of 6,925,230 bags has most likely been marginally increased, following the period of mixed but overall steady trade which has since followed.
The National Union of Coffee Agribusiness and Farmer Enterprise have voiced confidence that with the prevailing good weather conditions, that they anticipate much improved coffee crops for the forthcoming October 2016 to September 2017 coffee year. In this respect to see the country’s coffee exports of an approximate 80 to 20 ratio of robusta to arabica coffees, increase to approximately 4.2 million bags for the period.
This confident forecast follows some years of free market coffee trading within Uganda, which has with its influence upon the bargaining power of Uganda’s coffee farmers and the related quick cash returns for their coffee crops, proved to be inspirational for the expansion of the country’s coffee farming community. Thus with unforeseen weather issues aside for the coming year, one might say that Uganda is still on track to improved coffee crops over the coming years and to maintain its second position within the African coffee producers and likewise, its leading position in terms of the continents coffee export volumes.
The Northern Hemisphere summer holiday season is nearing the end and one would expect that post the Labour Day holiday in the U.S.A. on the 5th. August, that one might start to see the physical coffee market start to move out of its present lacklustre trading environment. However, in the meantime and with little in the way of threatening weather issues so far coming to the fore for the main coffee producer bloc’s, the physical arabica coffee market remains in something of a doldrums and with generally well covered consumer market industries proving to be complacent towards the market.
There is however with trade more hand to mouth in nature in terms of the robusta coffee market and despite the influences of the holiday season, relatively more physical trade activity within the robusta coffee markets. This mostly influenced by the dominance of the leading robusta coffee producer Vietnam, where the internal market price resistance continues to influence steady consumer market robusta coffee supply.
The November to December contracts arbitrage between the London and New York markets broadened on Friday, to register this at 59.18 usc/Lb., while this equates to a 41.79% 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 276 bags on Friday; to register these stocks at 1,286,655 bags. There was meanwhile a larger in volume 4,217 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 7,757 bags.
The commodity markets came under a degree of pressure from the renewed stability of the U.S. dollar on Friday, to see most markets experiencing a relatively flat end to the week and with the overall macro commodity index taking a softer track for the day. The New York arabica Coffee, Orange Juice, Wheat and Corn markets had a day of buoyancy and the U.S. Oil and Copper markets had a near to steady day, while the Brent Oil, Natural Gas, Sugar, Cocoa, London robusta Coffee, Cotton, 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 0.41% lower; to see this Index registered at 423.61. The day starts with the U.S. dollar showing a degree of early buoyancy and trading at 1.304 to Sterling and 1.128 to the Euro, while North Sea Oil is tending softer in early trade and trading at 49.05 per barrel.
The London market and New York markets opened the day on Friday on a relatively steady note and with both markets taking something of a sideways track and trading either side of par, into the early afternoon trade. However, as the slow and lacklustre afternoon trade started to pick up some volume the markets tended to ease off and both markets slipped back into modest negative territory, but to see both the markets bouncing off a relatively nearby low and once again move back into modest positive territory prior to the late in the day sell off which saw the London market move back below par, while the New York market managed to remain mostly above par. The London market continued to end the day on modestly softer note and having recovered 53.8% of the earlier losses of the day, while the New York market ended the day on a steady note and having retained only 9.7% of the earlier gains of the day on the close. This relatively damp close to the week and with little in the way of exciting news for the markets is likely to inspire little better than a hesitantly steady start for early trade today against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
SEP 1786 – 3 SEP 138.80 + 0.65
NOV 1817 – 6 DEC 141.60 + 0.15
JAN 1841 – 3 MAR 144.80 + 0.25
MAR 1854 – 3 MAY 146.75 + 0.35
MAY 1867 – 3 JUL 148.50 + 0.35
JUL 1879 – 3 SEP 150.10 + 0.30
SEP 1891 – 3 DEC 152.30 + 0.30
NOV 1904 – 3 MAR 154.45 + 0.30
JAN 1913 – 3 MAY 155.65 + 0.30
MAR 1920 – 3 JUL 156.70 + 0.25
