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 37.57% during the week of trade leading up to Tuesday 2nd. February; to register a net short sold position of 18,673 Lots. This net short sold position which is the equivalent of 5,293,713 bags has most likely been further reduced, following the period of mixed but overall mostly positive trade, which has since followed.

With the month of January 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 153,909 bags or 52.31% lower than the same month last year, at a total of 140,313 bags. This dip in exports has contributed to the islands cumulative robusta coffee exports for the first four months of the present October 2015 to September 2016 coffee year to be 364,270 bags or 26.41% lower than the same period in the previous coffee year, at a total of 1,016,214 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 this 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 an excess of a 2 million bags 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 Coffee Federation in Colombia have reported that the country’s coffee production for the month of January was 48,000 bags or 4.41% higher than the same month in the previous year, at a total of 1,136,000 bags. This improved performance has contributed to the countries cumulative production for the first four months of this new October 2015 to September 2016 coffee year to being 890,000 bags or 20.27% higher than the same period in the previous coffee year, at a total of 5,280,000 bags.

In terms of exports, the Coffee Federation in Colombia have reported that the country’s coffee exports for the month of January were 44,000 bags or 4.13% higher than the same month in the previous year, at a total of 1,109,000 bags. This improved performance has contributed to the countries cumulative exports for the first four months of this new October 2015 to September 2016 coffee year to being 462,000 bags or 11.24% higher than the same period in the previous coffee year, at a total of 4,571,000 bags.

Thus in terms of the new coffee year so far, we see Colombia building upon its impressive performance of the previous coffee year. However with the drier weather that is being experienced with the prevailing El Nino phenomenon that is presently in play and its negative effect upon the flowering for the next mid-year Mitaca crop, one might suggest that Colombian coffee production for this year new coffee year might struggle to match the impressive production level of the previous coffee year. But nevertheless a crop that combined with increased fine washed arabica coffee supply due from Central America and Peru, which shall be sufficient to satisfy consumer market demand for these quality fine washed arabica coffees, for the medium to longer term.

There has been a Reuters Poll held with thirteen leading traders and has come forth with the forecast that the New York market first position shall be trading at 123.65 usc/Lb. by the end of the first quarter of this year, while the London market first position should be trading at US$ 1,500.00 per Metric ton. The same poll forecasts that by the end of the year that the New York first position should be trading at 135.00 usc/Lb., while the London market first position shall be trading at US$ 1,575.00 per Metric ton. This poll providing little in the way of support, for the prevailing lacklustre market sentiment.

The May on May contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 56.45 usc/Lb., while this equates to a 46.12% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, with the good discount most likely due to remain in place for the foreseeable future, in line with steady robusta shipments out of Vietnam.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,827 bags on Friday; to register these stocks at 1,588,777 bags. There was meanwhile a larger in volume 3,710 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 25,211 bags.

The commodity markets were mixed in trade on Friday, with the overall macro commodity index taking a modestly softer track for the day. The Brent Oil, Natural Gas, Sugar and Cocoa markets had a day of buoyancy and the Gold market was steady, while the U.S. Oil, Coffee, Copper, Orange Juice, 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 0.38% lower to see this Index registered at 369.46. The day starts with the U.S. Dollar taking a steady track in early trade and trading at 1.4517 to Sterling and 1.113 to the Euro, while North Sea Oil is steady in early trade and is selling at 32.40 per barrel.

The London markets were erratic on Friday which is somehow not unexpected, with both the leading coffee producers who account for approximately 55% of world coffee production, starting to close up shop ahead of this week’s holidays. The Brazilians are due to be on their carnival holiday until Wednesday and the Vietnamese due to be on their Tet New Year (Year of the Monkey) for the entire week. The London market ended the day on a modestly negative note and with 47.1% of the earlier losses of the day intact, while the New York market ended on a negative note and with 90.2% of the earlier losses of the day intact. This negative end to what was previously a week of stability and recovery does little to inspire and one might expect to see little better than a near to steady start for early trade today against the prices set on Friday, as follows:

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

MAR 1427 – 8                                             MAR 120.40 – 2.80
MAY 1454 – 8                                             MAY 122.40 – 2.75
JUL 1481 – 7                                                  JUL 124.25 – 2.65
SEP 1505 – 7                                                  SEP 125.85 – 2.55
NOV 1526 – 6                                               DEC 127.85 – 2.30
JAN 1546 – 7                                                MAR 129.85 – 2.15
MAR 1567 – 7                                              MAY 131.10 – 2.10
MAY 1589 – 7                                                JUL 132.25 – 2.00
JUL 1610 – 7                                                   SEP 133.40 – 1.90
SEP 1625 – 7                                                  DEC 134.75 – 1.70