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 4.93% during the week of trade leading up to Tuesday 6th. March; to register a net short sold position of 50,727 Lots on the day. This net short-sold position which is the equivalent of 14,380,880 bags has most likely been once again marginally increased, following the period of mixed but overall 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 27.72% during the week of trade leading up to Tuesday 6th. March; to register a net short sold position of 12,560 Lots on the day. This net short sold position which is the equivalent of 2,093,333 bags is most likely little changed, following the period of mixed but overall sideways trade, which has since followed.

The Brazilian Coffee Exporters Council Cecafé have reported that the countries green coffee exports for the month of February were 8.4% lower than the same month last year, at a total of 2,119,320 bags. With these exports being dominated by the arabica coffees, which accounted for 99.05% of the total exports. Added to this were the exports of 236,340 bags of value added soluble coffees, calculated in terms of their green coffee equivalent.

Cecafé have forecast that the countries green coffee exports shall continue at this relatively modest month by month rate, until the new crop starts to have an impact during the second half of the year. However, one might speculate that should there be not much improvement in the value of the reference prices of the New York arabica coffee market, that internal market price resistance shall mute new crop selling aggression and a sharp rise in Brazil arabica coffee exports. Albeit that with a relatively large new conilon robusta coffee crop on the horizon, that there should be some volumes of conilon coffee exports coming to the fore, to buoy the overall coffee export volumes out of Brazil for the second half of the year.

The Ministry of Agricultural Affairs in Colombia has reported that over the past seven years that the government had provided finance to assist for farmers to rejuvenate 737,163 hectares of coffee lands, with the replacement of aged trees with new disease resistant and higher yielding coffee varieties. While they say that the program is not complete and that the government shall continue to provide finance to assist more farmers to participate in the program and one might expect that in the coming years, that Colombian coffee production shall further increase.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 39.41 usc/Lb., while this equates to 32.8% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 5,555 bags on Friday; to register these stocks at 1,908,938 bags. There was meanwhile a smaller in number 4,728 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 44,685 bags.

The commodity markets were mixed in trade on Friday and with many markets taking a softer track, but with the influential Oil markets showing renewed muscle to set the overall macro commodity index on a modestly positive track for the day. The Oil, London robusta Coffee, Copper, Gold and Silver markets had a day of buoyancy and the New York arabica Coffee market was near to steady for the day, while the Natural Gas, Sugar, Cocoa, Cotton, Orange Juice, Wheat, 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 0.08% higher; to see this index registered at 430.39. The day starts with the U.S. Dollar steady and trading at 1.386 to Sterling, at 1.232 to the Euro and with the dollar buying 3.255 Brazilian Real, while North Sea Oil is steady and is selling at US$ 65.40 per barrel.

The London and New York markets started the day on Friday with modest buoyancy and with both markets trading to the north of par, into the early afternoon trade. As the afternoon progressed the markets attracted more support and moved higher into positive territory, but while the London market retained its support and headed towards a positive close, the New York market came off the boil and slipped back into modest negative territory.

The London market ended the day on a positive note and with 83.3% of the earlier gains of the day intact, while the New York market ended the day on a near to steady note and having recovered 66.7% of the earlier modest losses, by the close. This somewhat mixed close and with nothing in the way of striking fundamental news coming to the coffee markets, provides for little to support sentiment at present and one might expect to see little better than a hesitantly steady start for early trade today against the prices set on Friday, as follows:

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

MAR 1830 + 20                                              MAR 118.85 – 0.15
MAY 1780 + 20                                              MAY 120.15 – 0.15
JUL 1800 + 15                                                JUL 122.40 – 0.20
SEP 1799 + 15                                                SEP 124.60 – 0.25
NOV 1797 + 13                                               DEC 127.95 – 0.30
JAN 1796 + 8                                                  MAR 131.40 – 0.30
MAR 1803 + 7                                                MAY 133.60 – 0.30
MAY 1815 + 6                                                JUL 135.50 – 0.30
JUL 1830 + 6                                                  SEP 137.15 – 0.35
SEP 1847 + 6                                                  DEC 139.65 – 0.35