The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net short sold position within the market by 50.95% over the week of trade leading up to Tuesday 24th. November; to register a net short sold position of 18,919 Lots on the day. This net short sold position that is the equivalent of 3,153,167 bags has most likely been further increased over the period of mixed but overall negative trade, which has since followed.

With the month of November passed the government trade data from Sumatra the leading coffee producing island within Indonesia have reported that the islands robusta coffee exports for the month were 30,765 bags or 11.4% lower than the same month last year, at a total of 239,197 bags. This dip in exports has contributed to the islands cumulative robusta coffee exports for the first two month of the present October 2015 to September 2016 coffee year to be 50,410 bags or 6.95% lower than the same period in the previous coffee year, at a total of 675,129 bags.

This dip in exports is more related to the prevailing price resistance to the relatively soft nature of the reference prices of the London robusta coffee market, than it is to any shortage of robusta coffees within the island for the present. However with the latest El Nino in play and likely to carry on through to the early in the second quarter of next year and ahead of the start of the harvest of the next new crop, one might expect that there might well be a dip in production due for Sumatra. Thus following the impressive recovery which saw Sumatra register a 1,106,841 bags or 30.84% increase in robusta coffee exports for the just completed October 2014 to September 2015 coffee year to total 4,696,081 bags, one might expect to see a dip in Sumatran robusta coffee exports due by the end of the present October 2015 to September 2016 coffee year.

This longer term potential for more modest robusta coffee exports from Sumatra during the second and third quarters of the coming year are however not a matter of concern, as it should be more than countered by the significant carryover stocks of robusta coffees within Vietnam. These stock due to join a potentially larger new crop of in excess of 28 million bags in Vietnam and a crop that should include close to 27 million bags of robusta coffees, which even with an approximate 2.5 million bags per annum domestic consumption, shall ensure good robusta coffee supply to the consumer markets for the foreseeable future.

The International Coffee Organisation has reported that global coffee exports for the month of October were 3.6% lower than the same month last year, at a total of 8.75 million bags. This dip they say was completely related to the lower volumes of robusta coffee exports which fell by 11.7% for the month, as against a 1.9% increase in arabica coffee exports for the month. This dip in robusta coffee exports not being related to any shortage of supply, but rather to the prevailing price resistance that is being experienced within the producer countries.

The March on March contracts arbitrage between the markets narrowed yesterday, to register this at 51.29 usc/Lb., while this equates to a 42.87% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact in more volume upon the fortunes of the London market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 7,918 bags yesterday; to register these stocks at 1,835,936 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,405 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 7,167 bags on Friday 27th. November; to see these stocks registered at 3,338,833 bags on the day.

The commodity markets were mixed in trade yesterday but with the muscle of the U.S. dollar continuing to impact within many markets, the overall macro commodity index was on a back foot for most of the day’s trading activity. The Natural Gas, Cocoa, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy and the U.S. Oil was steady, while the Brent Oil, Sugar, Coffee, Cotton, Copper, Orange Juice and Wheat markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.24% lower to see this Index registered at 380.00. The day starts with the U.S. Dollar near to steady in early trade and trading at 1.510 to Sterling and 1.058 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at 44.20 per barrel.

The London and New York markets started the day on a steady note yesterday, but with both markets starting to dip below par as the morning progressed and with the New York market in particular losing its way in early afternoon trade and having some influence upon the London market, which started to attract selling pressure. With the firm U.S. dollar in play and the weaker nature of the Brazil Real indicating the probability of increase selling out of Brazil the New York market fell back further and to attract sell stops, which accelerated the losses and with both markets taking a softer track for the rest of the day, albeit with some degree of bounce off the lows being experienced within the New York market. The London market continued to end the day on a very soft note and with 92.3% of the earlier losses of the day intact, while the New York market ended the day on a soft note and with 71.8% of the earlier losses of the day intact. This soft close changes the nature of the charts and does little to inspire, but one might expect that there might be some cautious corrective buoyancy due for early trade today against the prices set yesterday, as follows:

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

NOV 1481 unch                                          DEC    116.90 – 4.10
JAN 1478 – 36                                           MAR    119.65 – 3.95
MAR 1507 – 36                                         MAY    121.80 – 3.95
MAY 1532 – 35                                           JUL    123.90 – 3.90
JUL 1556 – 34                                             SEP    125.75 – 3.80
SEP 1576 – 34                                            DEC    128.60 – 3.55
NOV 1595 – 35                                         MAR    131.40 – 3.30
JAN 1613 – 36                                          MAY    133.30 – 3.25
MAR 1631 – 36                                          JUL    135.10 – 3.25
MAY 1653 – 38                                          SEP    136.85 – 3.20