The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market decrease their net long position by 18.39% within this market over the week of trade leading up to Tuesday 29th. September; to register a new net long position of 36,246 lots. Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 5.79%, to register a net long position of 58,825 Lots on the day.
Over the same week, the Non-Commercial Speculative sector of this market decreased their net long position within the market by 20.09% to register a new net long position of 25,645 Lots which is the equivalent of 7,270,244 bags. This net long position has most likely been decreased, following the period of mixed but overall softer trade that has since followed.
The International Coffee Organisation ICO have reported that the global coffee exports for the month of August were 7.5% lower than the same month last year, at a total of 10.04 million bags. This, according to their report, illustrates the consequent effects of covid-19 related lockdowns impacting supply chains through challenging logistics over these months with many producer countries navigating their way toward easing of lockdown restrictions, in contrast to many northern hemisphere consumer markets where covid-19 related lockdown regulations are tightening once again. The ICO have reported that this month of August, is the lowest volume of shipments recorded for August since 2015, with concerns raised that this may be indicative of a decline in demand as the outlook for global economic coffee growth in this coffee year is anticipated to be flat if not lower than consumption forecasts issued ahead of covid19 related lockdowns.
This lower export figure reported in the month of August, has contributed to the cumulative global coffee exports for the first eleven months of the October 2019 to September 2020 coffee year to be 5.60% lower than the same period in the previous coffee year, at a total of 116.54 million bags.
The International Coffee Organisation ICO have also come forth with their latest report to revise their forecast for global supply and demand signals, to report that against a global coffee supply of 169.34 million bags for the present October 2019 to September 2020 coffee year, they now estimate global coffee consumption to be approximately 167.81 million bags. This new estimate revised down by 0.35% when compared to the same report in the previous month. This would push the global coffee markets into a slight surplus supply situation, which the ICO estimates to be 1,538,000 bags at the end of September 2020.
In the report, the ICO have reviewed their estimate to shift demand downwards, global coffee consumption is now estimated to be approximately 167.81 million bags, down from an earlier in the year estimate which was put at 168.39 million bags. This is related to the fact that there was an initial earlier in the year uptick in demand, right at the outset of the global pandemic. With many industry players stockpiling due to the uncertainty of what was to come, subsequently there has been an estimated slowdown in consumption which is forecast to continue during the remaining months of this coffee year due to the ongoing pressure from global economic downturns and the slow recovery of the out of home consumption market. There is also a concern that many countries are expecting a second wave of Covid-19 infections towards the end of the coffee year.
The November to December contract arbitrage between the London and New York markets narrowed yesterday; to register this at 49.68 usc/Lb. This equates to 46.34% price discount for the London Robusta coffee market.
The Certified washed Arabica coffee stocks held against the New York exchange were seen remain unchanged yesterday to register these stocks at 1,096,224 bags, with 93.80% of these certified stocks being held in Europe at a total of 1,028,026 bags and the remaining 6.20% being held in the USA at a total of 68,198 bags. There was meanwhile a larger in number 9,960 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,311 bags.
It was a firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a firm sideways track for the day. The Sugar market ended the day on a positive note, while the Coffee and Cocoa markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.3780% higher; to see this index registered at 412.3106. The day starts with the U.S. Dollar steady, trading at 1.298 Sterling, at 1.179 the Euro and with the US Dollar buying 5.575 Brazilian Real.
The New York and London markets both started the day yesterday trading on a modest soft note, both markets maintained this softer stance for most of the morning trade. The volume in both markets were relatively subdued at the outset. As the afternoon progressed both the London and the New York markets started to attract buying support to see the markets recover some of the earlier losses of the day, this support was short lived and both markets soon came under a degree of pressure to see the markets fall back from the highs of the day, both the London and the New York markets settled near to the lows of the day.
The London market ended the day with on a negative note with 68.75% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 68.63% of the earlier losses of the day intact. This softer close does little to indicate direction or inspire confidence and one might think that the markets are due for little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
NOV 1268 – 22 DEC 107.20 – 1.75
JAN 1293 – 18 MAR 109.40 – 1.55
MAR 1310 – 17 MAY 110.95 – 1.40
MAY 1327 – 16 JUL 112.40 – 1.35
JUL 1343 – 15 SEP 113.70 – 1.25
SEP 1359 – 15 DEC 115.15 – 1.00
NOV 1375 – 15 MAR 116.60 – 0.85
JAN 1394 – 14 MAY 117.75 – 0.70