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 long position within the market by 22.51% during the week of trade leading up to Tuesday 4th. April; to register a net long position of 2,703 Lots on the day. This net long position which is the equivalent of 766,289 bags has most likely been marginally increased again, following the period of mixed but overall more positive trade, which has since followed.
The National Coffee Institute in Costa Rica have reported that the countries coffee exports for the month of March were 7,034 bags or 4.01% lower than the same month last year, at a total of 168,413 bags. This has contributed to the countries cumulative coffee exports for the first six months of the present October 2016 to September 2017 coffee year to be 48,082 bags or 9.83% lower than the same period in the previous coffee year, at a total of 440,683 bags.
This dip in coffee exports from Costa Rica in light of the reports that due to unseasonal excessive rain interruptions at the start of the last harvest that had damaged the potential of the new crop, was to have been expected. While with this small dip in production from what is now one of the small producers within the Central American producer bloc being overshadowed by the surge in production from Honduras, it is not a factor of concern for the market and shall have little impact upon market sentiment.
The latest March 2017 coffee report from the International Coffee Organisation highlights that the prevailing good supply of arabica coffees that is presently in play and over and above the high levels of mainstream consumer market coffee stocks, is the reason for the prevailing soft nature of the volatile New York market. But the report does estimate that global coffee consumption presently marginally exceeds global coffee production and is a view that is largely accepted, by most private trade and industry reports.
Thus, one might comment that with the uncertainties of weather to the fore, that any issues that might develop for any of the main coffee producer blocs, would very quickly change the present complacency within the presently sideways trading coffee markets. Suggesting that caution might dictate that the downside for the markets is presently limited, while the medium-term upside potential for the markets might be the more realistic view to take.
The July to July contracts arbitrage between the London and New York markets broadened on Friday, to register this at 42.88 usc/Lb., while this equates to 30.11% price discount for the London robusta coffee market. This once again narrowing arbitrage is now becoming less of an attractive factor for the many price sensitive roast and ground roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,265 bags on Friday; to register these stocks at 1,374,482 bags. There was meanwhile a similar in number 2,153 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 68,324 bags.
The commodity markets were in receipt of improved employment figures from the U.S.A. on Friday and a firming of the dollar which had its impact within many markets, but the overall macro commodity index did nevertheless manage to take a steady track for the day. The Oil, Sugar, Coffee, Orange Juice and Gold markets had a day of buoyancy, while the Natural Gas, Cocoa, Cotton, 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 0.04% higher, to see this Index registered at 418.05. The day starts with the U.S. Dollar steady and trading at 1.239 to Sterling and at 1.058 to the Euro, while North Sea Oil is steady and is selling at $ 54.60 per barrel.
The London market started the day on Friday on a steady note and the New York market following an initial pip up on a modestly softer note, with the London market hovering around par and the New Yorke market tending to remain south of par for the early afternoon trade. As the day progressed however the London market started to add some value and with the New York market following suit, to see both markets taking a positive stance for late in the day’s trade. The London market ended the day on a positive note and with 86.2% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 92% of the earlier gains of the day intact. This close assists to improve the technical picture of the markets and might perhaps assist to buoy confidence, but with a firmer U.S. dollar in play and along with a weaker Brazil Real that is trading at close to 3.15 to the dollar, one might not expect much more than a cautious steady start for early trade today against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAY 2170 + 27 MAY 140.05 + 2.30
JUL 2194 + 25 JUL 142.40 + 2.30
SEP 2199 + 23 SEP 144.75 + 2.30
NOV 2200 + 22 DEC 148.15 + 2.30
JAN 2195 + 20 MAR 151.35 + 2.30
MAR 2197 + 20 MAY 153.55 + 2.35
MAY 2201 + 20 JUL 155.25 + 2.20
JUL 2209 + 22 SEP 156.75 + 2.15
SEP 2217 + 22 DEC 158.85 + 2.15
NOV 2224 + 22 MAR 160.95 + 2.15