Coffee Market Report
The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market increase their net long position within the market by 30.04% over the week of trade leading up to Tuesday 6th. September; to register a net long position of 41,821 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.86%, to register a net long position of 40,205 Lots on the day.
Over the same week the Non Commercial Speculative sector of this market increased their long position within the market by 39.20%, to register net long position of 38,718 Lots. This net long position which is the equivalent of 10,976,381 bags is most likely to have been decreased again, following the period of mixed but overall more negative trade that has since followed and likewise, that of the Managed Money Fund sector within this market.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non Commercial sector of this market increase their net long position within this market by 20.48% during the week of trade leading up to Tuesday 6th. September; to register a long position of 32,126 Lots. This net long position which is the equivalent of 5,354,333 bags has most likely been since increased, following the period of mixed but overall more positive trade that has since followed.
The evidence of the now extensive net long positions with the coffee markets albeit that there might have been some speculative and fund profit taking liquidation since last Tuesday within the New York market, is tending to reflect the view that that most players are now looking to a modest deficit coffee supply for the coming October 2016 to September 2017 coffee year. This deficit supply seemingly in the bank and on top of the now modest producer coffee stock levels, indicating how vulnerable the coffee supply scenario is to any unforeseen climatic problems that might come to any of the main coffee producer blocs in the coming months.
This with the world weather conditions somewhat erratic in recent years is a realistic risk and is perhaps good reason for the market players to be cautious, but one might foresee that if by the end of this year that the weather conditions are generally normal and not threatening to longer term global coffee supply, there might be some degree of waning in the confidence of the bulls within the coffee markets. Thus one might suggest that unless there are some real weather concerns soon to come to the markets, that the upside for the markets might be somewhat limited and with the funds long, vulnerable to increasing volumes of producer new crop price fixation hedge selling.
The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 63.54 usc/Lb., while this equates to a 42.11% 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 with the exchange were seen to decrease by 1,750 bags yesterday; to register these stocks at 1,269,342 bags. There was meanwhile, a larger in volume 8,000 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 13,363 bags.
The commodity markets had a mixed day yesterday against a bit of a wobble for the U.S. dollar, following indications that it would be unlikely that there would be an increase in the U.S. interest rate announced during next week’s meeting of the Federal Reserve Bank, with the overall macro commodity index taking a sideways path for the day. The Oil, Natural Gas, Sugar, Cocoa, London robusta Coffee, Copper, Orange Juice and Wheat markets had a day of buoyancy, while the New York arabica Coffee, Cotton, 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 0.30% lower; to see this Index registered at 417.35. The day starts with the U.S. dollar near to steady in early trade and trading at 1.333 to Sterling and 1.123 to the Euro, while North Sea Oil is near to steady in early trade and trading at 47.25 per barrel.
The London and New York markets opened the day yesterday on a marginally softer note and maintained this stance into the early afternoon trade, when the London market recovered and moved back into positive territory, while the New York market remained within negative territory. As the afternoon progressed the London market started to build upon its gains and to take a steady upside track for the rest of the day’s trade, while the New York market attracted support to take an erratic recovery track, but with the pips back to the north of par continuing to encounter selling pressure and taking the market through to a near to steady end to the day. The London market ended the day on a positive note and with 89.5% of the earlier gains of the day intact, while the New York market ended the day on a marginally softer note, but having recovered 90.7% of the earlier losses of the day by the close. This mixed close but with the New York market having shrugged off the earlier negative pressure and the London market continuing to show some muscle, is likely to inspire a cautiously near to steady start for early trade today against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
SEP 1919 + 16 SEP 149.70 – 0.25
NOV 1926 + 17 DEC 150.90 – 0.25
JAN 1946 + 16 MAR 154.10 – 0.25
MAR 1959 + 15 MAY 156.00 – 0.25
MAY 1969 + 15 JUL 157.75 – 0.25
JUL 1979 + 17 SEP 159.10 – 0.30
SEP 1990 + 20 DEC 161.05 – 0.20
NOV 2002 + 20 MAR 162.80 – 0.15
JAN 2011 + 20 MAY 163.80 – 0.15
MAR 2018 + 20 JUL 164.80 – 0.15
