Coffee Market Report

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 short sold position within the market by 15.66% during the week of trade leading up to Tuesday 13th. February; to register a net short sold position of 47,736 Lots on the day. This net short-sold position which is the equivalent of 13,532,944 bags has most likely been once again increased, following the period of mixed but ultimately more negative trade, which has since followed.

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 short sold position within this market by 7.12% during the week of trade leading up to Tuesday 13th. February; to register a net short sold position of 12,089 Lots on the day. This net short sold position which is the equivalent of 2,014,833 bags has most likely been increased again, following the period of mixed but ultimately more negative trade, which has since followed.

The Ministry of Agriculture in El Salvador have announced that they foresee that the countries Legislative Assembly shall soon approve the disbursement of 80 million U.S. dollars in funding that is available form the Central American Bank of Economic Integration, which the anticipate shall be available to finance the renovation of coffee plantations by April. One might speculate though that with the relatively dismal prices being dictated by the speculatively driven New York arabica coffee market for the countries coffee farmers of whom many are commercial rather than small scale farmers, if many might be more encouraged to consider it to be better for long term business to rather plant out alternative and more sustainably profitable crops such as avocado pears and macadamia nuts, than to look to replace aged coffee trees.

With El Salvador presently in terms of its relatively modest coffee crop of approximately 600,000 bags per annum, one of the smaller players in terms of the overall regional Mexican and Central American coffee production. This producer bloc and with the new crop harvest having peaked, forecasting a new crop that shall be close to 21 million bags.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 40.89 usc/Lb., while this equates to 33.95% 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 6,248 bags on Friday; to register these stocks at 1,896,354 bags. There was meanwhile smaller in number 4,490 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 15,701 bags.

The commodity markets had a mixed day on Friday but with many markets coming under pressure as the day progressed, to see the overall macro commodity index tending softer for the day. The Oil, Cotton and Orange Juice markets nevertheless had a day of buoyancy and the Gold market was steady, while the Natural Gas, Sugar, Cocoa, Coffee, Copper, Wheat, Corn, Soybean and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.17% lower; to register this index at 425.35. The day starts with the U.S. Dollar steady and trading at 1.402 to Sterling, at 1.241 to the Euro and the dollar is buying 3.231 Brazilian Real, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 65.00 per barrel.

The London and New York markets started trading with some degree of buoyancy on Friday, to see both markets taking a steady to positive track into the early afternoon trade. As the afternoon progressed the New York market and with added pressure coming with selling of the prompt March contract ahead of today’s holiday and tomorrows first notice day for this contract, slipped back into negative territory. This was soon followed by the London market and with the New York market triggering of sell stops, to accentuate the losses. The London market followed suit in a more sedate manner, to see both markets heading towards significant losses ahead of the Presidents Day long weekend for the New York market.

The London market ended the day on a soft note and with 80.6% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 96.1% of the earlier losses of the day intact. This close does not provide much indication for direction, but with the Vietnamese still off the field of play today for their Tet New Year holiday and the influence of the volatile New York market off the field of play for the Presidents Day holiday in the U.S.A., one might expect that the London market trading solo shall be due for some corrective buoyancy for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                    NEW YORK ARABICA USc/Lb.

MAR 1789 – 29                                              MAR 117.95 – 3.80
MAY 1754 – 29                                              MAY 120.45 – 3.70
JUL 1781 – 26                                                JUL 122.75 – 3.60
SEP 1783 – 25                                                SEP 125.05 – 3.55
NOV 1786 – 24                                              DEC 128.60 – 3.50
JAN 1792 – 21                                               MAR 132.00 – 3.40
MAR 1800 – 17                                              MAY 134.10 – 3.35
MAY 1814 – 17                                              JUL 135.95 – 3.35
JUL 1842 – 17                                                SEP 137.60 – 3.30
SEP 1845 – 17                                                DEC 140.05 – 3.30