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 decrease their net short sold position within the market by 89.16% over the week of trade leading up to Tuesday 8th. August; to register a new net short-sold position of 1,225 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.58%, to register a net long position of 33,938 Lots on the day.
Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 69.05%, to register a net short sold position of 4,560 Lots. This net short sold position which is the equivalent of 1,292,740 bags has most likely been increased again, following the mixed but overall more negative trade which has since followed and likewise, that of the Managed Money fund sector of the 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 10.22% during the week of trade leading up to Tuesday 8th. August; to register a net long position of 25,120 Lots. This net long position which is the equivalent of 4,201,667 bags has most likely been little changed to perhaps marginally decreased again, following the period of mixed but overall more negative trade that has since followed.
Weather forecasters in Brazil and supported by the Thomson Reuters Agricultural Weather Dashboard are forecasting rains due for the main arabica coffee districts within Sao Paulo and southern Minas Gerais to start today, with these rains due to continue for approximately a week. Such rains and with the new crop harvest now close to completion would be likely to trigger early flowerings for the next 2018 crop by the end of the month and the news is by nature, somewhat bearish for market sentiment.
One might however need to be a bit cautious over the prospects of early flowerings, as should these early rains not be followed by the middle of September by further good rains, there would be the risk of abortion of some of these early flowerings. A factor which would support negative speculation over the prospects for the next 2018 Brazil coffee crop which is so far, being forecasted to be a potentially larger new crop.
The National Coffee Association in Guatemala Anacafé and with a ready market for robusta coffees in neighbouring Mexico, say that they are looking to promote the planting of robusta coffees within the lower altitude districts in the country, where arabica coffee is not an option. In this respect and in addition to their estimated 847,000 bags demand for robusta coffees from the soluble coffee industries in Mexico, they say that they foresee additional robusta coffee demand from Italy and the overall prospects for a healthy robusta coffee industry, alongside the countries already well respected in terms of quality, arabica coffee industry.
The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 45.25 usc/Lb., while this equates to a 32.21% price discount for the London Robusta coffee market.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 974 bags yesterday; to register these stocks at 1,584,445 bags. There were meanwhile a larger in number 7,404 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 109,266 bags.
The speculation that the Chinese economy is slowing down and along with the renewed muscle of the U.S. dollar was a negative factor most of the commodity markets yesterday, to see the overall macro commodity index taking a softer track for the day. The Sugar and Silver markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean and Gold markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.67% lower, to see this Index registered at 402.71. The day starts with the U.S. Dollar steady and trading at 1.296 to Sterling and at 1.177 to the Euro, while North Sea Oil is steady and is selling at $ 50.30 per barrel.
The London market started the day yesterday trading close to par, while the New York market started the day modestly south of par and with the London market soon following suit, to see the markets taking a negative track into the early afternoon trade. As the afternoon progressed and with the combination of a stronger U.S. dollar and the negative nature of the overall macro commodity index having an influence, the New York market fell back into deeper negative territory and followed by the London market. With both markets then taking a sideways negative track, through to the close.
The London market ended the day on a negative note and with 91.7% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 83.7% of the earlier losses of the day intact. This negative close that is really not being accompanied by producer selling pressure and is perhaps more in the hands of the speculative sectors of the markets, is not supportive for confidence and paints something of a negative picture for the charts. Which might suggest that the markets are due for at best a 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 2105 – 34 SEP 136.95 – 3.35
NOV 2100 – 33 DEC 140.50 – 3.35
JAN 2080 – 32 MAR 144.00 – 3.40
MAR 2069 – 33 MAY 146.25 – 3.40
MAY 2076 – 33 JUL 148.45 – 3.40
JUL 2095 – 33 SEP 150.50 – 3.35
SEP 2104 – 33 DEC 153.50 – 3.30
NOV 2112 – 33 MAR 156.35 – 3.30
JAN 2118 – 33 MAY 157.95 – 3.30
MAR 2123 – 33 JUL 159.45 – 3.35
