Coffee Market Report
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non Commercial sector of this market decrease their net long position within this market by 6.62% during the week of trade leading up to Tuesday 23rd. August; to register a long position of 23,984 Lots. This net long position which is the equivalent of 3,997,333 bags has most likely been little changed, following the period of mixed but overall sideways trade that has since followed.
The Coffee Export Centre in Nicaragua have reported that the countries coffee exports for the month of July were 9,004 bags or 4.76% higher than the same month last year, at a total of 198,358 bags. This improved performance has contributed to the countries cumulative exports for the first ten months of the present October 2015 to September 2016 coffee year to be 83,741 bags or 5.23% higher than the same period in the previous coffee year, at a total of 1,684,768 bags.
All indications so far are that climatic conditions have been friendly for Nicaragua and its neighbours in the important fine washed arabica coffee producer bloc of Mexico and Central America and that with the new crop cherries developing at present towards the year end and first quarter of the coming year harvest, that this will prove to be a positive crop that might bring to the fore a 5% to as much as 7% larger new crop. This new crop likely to exceed 18 million bags and with domestic consumption aside, to fuel exports in excess of 15 million bags for the coming October 2016 to September 2017 coffee year.
The La Nina weather phenomenon within the Pacific Ocean is still seen to be a possibility but with the latest indication that even if it does develop, it shall prove to be a relatively modest La Nina. Therefore, for the present the earlier threats of excessive and coffee crop damaging rains for Colombia and Indonesia are not foreseen to be much of a threat. While with the El Nino phenomenon that contributed to the partial drought conditions for the main conilon robusta coffee districts of Brazil and the more modest conilon robusta crop this year now history, the prospects are for a much improved conilon robusta crop for Brazil next year.
Thus while it is early days and one still has to encounter the spring and summer rain season for Brazil this year, there would appear to be little in the way of weather concerns for the coffee markets for the present. With the speculation over the possibility of biennial bearing being modestly negative for the next 2017 Brazil arabica coffee crop being countered by the speculation that normal rains shall be beneficial for the 2017 Brazil conilon crop and therefore, an overall fair to good Brazil coffee crop for next year. This neutral weather news, thus contributing towards neutral sentiment for the markets for the present, to see the coffee markets continuing to remain within the prevailing trading range.
The November to December contracts arbitrage between the London and New York markets broadened yesterday, to register this at 62.59 usc/Lb., while this equates to a 43.14% 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 3,220 bags yeterday; to register these stocks at 1,280,579 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,869 bags.
The commodity markets lacked the participation of the UK based markets, as the country celebrated their end of summer bank holiday long weekend but with the rest of the markets tending softer for the day, to see the overall macro commodity index taking a softer track for the day. The Sugar, New York arabica Coffee, Orange Juice, Wheat, Gold and Silver markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Cotton, Copper, Corn and Soybean markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.59% lower; to see this Index registered at 415.41. The day starts with the U.S. dollar showing some degree of buoyancy in early trade and trading at 1.308 to Sterling and 1.117 to the Euro, while North Sea Oil is steady in early trade and trading at 49.00 per barrel.
With the London market closed of the day yesterday the New York market started its three and quarter hour late start shortened day yesterday on a steady note and set something of a platform for some good buoyancy that developed into gains of 2.40 usc/Lb. and with the active second position December contract rising to 147.25 usc/Lb., but with perhaps the influence of the negative nature of the overall macro commodity index in play this was not sustained and the market took a late in the day downside track. The New York market thus ended the day on only a modestly positive note, with only 10.4% of the earlier gains of the day intact. This faltering close does little to inspire but with the Brazil Real having recovered to 3.22 to the U.S. dollar and indicating selling resistance of new crop arabica coffees out of Brazil, one might expect to see a steady start for the markets for early trade today against the prices set in London on Friday and New York yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
SEP 1783 + 22 SEP 144.00 + 0.10
NOV 1819 + 22 DEC 145.10 + 0.25
JAN 1838 + 17 MAR 148.25 + 0.25
MAR 1854 + 17 MAY 150.15 + 0.25
MAY 1867 + 17 JUL 151.75 + 0.20
JUL 1878 + 17 SEP 153.25 + 0.20
SEP 1890 + 17 DEC 155.35 + 0.20
NOV 1903 + 17 MAR 157.35 + 0.25
JAN 1912 + 17 MAY 158.45 + 0.25
MAR 1919 + 17 JUL 159.45 + 0.25
