Coffee Market Report
| The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within the market by 33.61% over the week of trade leading up to Tuesday 9th. June; to register a net long of 10,857 Lots on the day. This net long that is the equivalent of 1,809,500 bags has most likely been further increased over the period of mixed but overall more positive trade, which has since followed.
The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks increased by 85,372 bags or 1.64% during the month of May, to register these stocks at 5,289,450 bags at the end of the month. These stocks do not of course include the in transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is fed by these stocks of 500,000 bags per week, would conservatively have been at least 1 million bags. Therefore if one is to consider the additional unreported stocks and look to end August stocks in North America of at the very least 6.3 million bags, it would have equated to at least a very safe 12.6 weeks of roasting activity and still a safe reserve, in terms of the potential for a continued steady flow of new crop coffees from Mexico, Central America, Colombia, Peru, Vietnam and Indonesia. To soon be followed by the new crop coffees from Brazil, where all the latest forecasts are now pointing towards a much better than had initially been forecasted, new arabica coffee crop. Albeit that on the short term with the prevailing soft nature of the terminal markets, one can expect that price resistance might slow producer selling activity. The National Export Centre in Nicaragua have reported that the country’s coffee exports for the month of April were 32,393 bags or 16.5% higher than the same month last year, at a total of 228,696 bags. This improved performance follows improved performances in the preceding months and the countries cumulative coffee exports for the first seven months of the present October 2014 to September 2015 coffee year are 207,037 bags or 28.49% higher than the same period in the previous coffee year, at a total of 933,842 bags. The Customs authorities in Vietnam have confirmed that the country’s exports of mostly robusta coffees for the month of May were very much in line with trade forecasts for the month, at a total of 1.75 million bags. This figure follows many months of relatively low export volumes that are related to the internal market price resistance that has dampened interest in the carry of Vietnam robusta coffee stocks by the consumer market trade and thus contributes to the countries cumulative exports for the first five months of this year to being 39.2% lower than the same period in the previous year, at a total of 9,673,333 bags. The weather conditions in South Eastern Brazil are generally dry and the new crop arabica coffee harvest is picking up in volume, while the earlier to ripen new crop conilon robusta coffee harvest is already peaking. However with the soft nature of the reference prices of the international markets, there is presently price resistance being shown by the farmers and sales of new crop Brazil coffees are slow. The arbitrage between the markets has narrowed yesterday to register this at 51.65 usc/Lb., while this equates to an attractive 39.64% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 765 bags yesterday; to register these stocks at 2,128,774 bags. There was meanwhile a larger in volume 5,906 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 41,122 bags. The commodity markets were generally softer yesterday, with the overall macro commodity index once again taking a softer track for the day. The Natural Gas, Cocoa, Gold and Silver markets nevertheless showed some buoyancy and the London robusta Coffee market was steady, while the Oil, Sugar, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.68% lower to see this Index registered at 419.09. The day starts with the U.S. Dollar tending softer and selling at 1.561 to Sterling and 1.128 to the Euro, while North Sea Oil is steady in early trade and is selling at 62.45 per barrel. The London and New York markets opened the day taking a softer track yesterday, but with the London market soon recovering to enter the afternoon trade on a positive note. This recovery for the London market started to trigger buy stops for the prompt months and there was a brief rally that added $ 36.00 per Metric Ton to the value of the prompt September contract, prior to selling pressure coming into play, while the New York market continued on its downside track. The London market with New York losing further weight reverted to a downside track and while ending the day on a steady note, had shed 97.2% of the earlier gains of the day by the close. In the meantime the New York market had been triggering sell stops on its downside track and with relatively high volumes of trade in play, ended the day on a soft note and with 86.3% of the losses of the day intact. The dismal close in the New York market and with the charts looking soft does little to inspire confidence and one might expect to see a softer start for the London market and only a close to steady start for the New York market for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1755 + 33 JUL 127.80 – 4.25 |
