Coffee Market Report

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money sector of this market increase their net short sold position within the market by 4.34% during the week of trade leading up to Tuesday 22nd. January; to register a short-sold position of 28,007 Lots on the day. This net short position which is the equivalent of 4,667,833 bags has most likely been little changed to perhaps marginally decreased further, following the period of mixed but overall more positive trade that has since followed.

There remains no indication of the Commitment of Traders status from the leading and volatile New York market, with the U.S.A. Federal Government closure of the U.S. Commodity Futures Trading Commission resulting, but with a temporary government funding agreement announced on Friday, these figures might soon be coming to the fore. However, one might speculate that with the New York market having closed 7.4% higher than the value of the last reported Commitment of Traders position on the 18th. December, that the net short position within this market has been since reduced.

With only eight days of the Vietnamese and Chinese Year of the Dog left and only five trading days for the Vietnamese robusta coffee farmers and exporters before the country closes for the coming weekend and the week-long holidays that start on Monday 4th. February, for the eve of the Tet New Year and the bringing in of the Year of the Pig, one might expect to see some volumes of price fixation selling pressure over the London market. Albeit that one might speculate that business activity might already start winding down by Thursday, as families concentrate more on the preparations for the following weeks celebrations and trading activity shall start to slow.

The March to March contracts arbitrage between the London and New York markets broadened on Friday, to register this at 37.22 usc/Lb., while this equates to 34.85% 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 215 bags on Friday; to register these stocks at 2,480,804 bags. There was meanwhile a larger in number 9,030 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 41,047 bags.

The commodity markets encountered a modest softening of the U.S. dollar and had a mixed but mostly more positive day on Friday, to see the overall macro commodity index taking a positive track for the day. The Oil, Natural Gas, New York arabica Coffee, Cotton, Copper, Orange Juice, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Sugar, Cocoa, London robusta Coffee and Wheat markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.54% higher; to see this index registered at 403.83. The day starts with the U.S. Dollar steady and trading at 1.319 to Sterling, at 1.141 to the Euro and with the dollar buying 3.769 Brazilian Real.

The London and New York markets started the day on Friday on a softer note, while the New York market started the day on a positive note and to see the markets taking a mixed stance, into the early afternoon trade. As the afternoon progressed the London market moved up to trade around par and the New York market remaining within positive territory, but with the London market soon coming under renewed pressure and moving back into negative territory. The New York market came under pressure to dip back towards par, but soon attracted renewed support and bounced back towards a positive close for the day and the week, while the London market remained within negative territory.

The London market ended the day on a negative note and with 73.7% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 85.7% of the earlier gains of the day intact. This close assists to paint a more positive picture for the charts of the New York market and might inspire some degree of cautious confidence, but with the London market potentially remaining under short-term Vietnam price fixation selling pressure, there might be some a degree of hesitancy. There might though also be some consumer industry buying support coming in under the London market, to assist towards something of a steady start for early trade today, against the prices set on Friday, as follows:

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

JAN 1528 unch                                               MAR 106.80 + 1.50
MAR 1534 – 14                                              MAY 109.90 + 1.45
MAY 1557 – 12                                              JUL 112.65 + 1.45
JUL 1575 – 12                                               SEP 115.40 + 1.50
SEP 1592 – 12                                               DEC 119.20 + 1.55
NOV 1610 – 13                                              MAR 122.90 + 1.55
JAN 1628 – 13                                               MAY 125.15 + 1.55
MAR 1647 – 13                                              JUL 127.30 + 1.55
MAY 1666 – 13                                              SEP 129.30 + 1.50
JUL 1682 – 13                                                DEC 132.30 + 1.50