The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 22.66% during the week of trade leading up to Tuesday 20th. February; to register a net short sold position of 58,554 Lots on the day. This net short-sold position which is the equivalent of 16,599,800 bags has most likely been once again marginally decreased, following the period of mixed but overall more positive trade, which has since followed.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non-Commercial sector of this market increase their net short sold position within this market by 20.94% during the week of trade leading up to Tuesday 20th. February; to register a net short sold position of 14,621 Lots on the day. This net short sold position which is the equivalent of 2,436,833 bags has most likely been increased a little further, following the period of mixed but overall more negative trade, which has since followed.

The extensive net short sold positions held by the speculative and managed money fund sectors within the New York market and to a lesser degree within the London market, comes with the perspective for rising coffee supply for the second half of the year, with the advent of a larger new Brazil crop. This does by nature of the negative influence that the short selling activity have upon the reference prices of these markets have upon physical coffee prices, really hurt the producers for the present and keep the main stream consumer market industries relatively complacent.

But one must question how much more appetite has the speculative sector of the market got in terms of further short selling activity and might it be that the markets are likely to stabilise at the present levels and once the perception is that the downside is over, that speculative profit taking might come to the fore and to bring back some corrective buoyancy for the markets. The question is when and one might speculate that while the present speculative trend is to sell against the prospects of the larger new Brazil crop, that the Brazilian farmers who shall have only negligible carry over stocks into the new crop, shall not be aggressive sellers of their larger new crop.

Rather that with time in hand to sell these new crop Brazil coffees and a need to rebuild their stocks, that the Brazilian coffee farmers shall ahead of the new crop show some degree of price resistance for forward sales and hold back for higher value from the exporters. This could if this scenario were to become a fact and an indication that there might not after all be a flood of coffees coming to the market at the end of the year and particularly so in terms of the new Brazil arabica coffee crop, be the trigger for some speculative profit taking and buying back into the New York market and with some new-found buoyancy for the market forthcoming.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 41.58 usc/Lb., while this equates to 34.36% 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 1,813 bags on Friday; to register these stocks at 1,890,548 bags. There was meanwhile larger in number 2,475 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 16,580 bags.

The commodity markets were mixed in trade on Friday, but with buoyancy in many the markets assisting for the overall macro commodity index to take a marginally positive track for the day. The Oil, Cocoa, Cotton, Orange Juice, Wheat and Soybean markets had a day of buoyancy and the New York arabica Coffee and Corn markets were steady for the day, while the Natural Gas, Sugar, London robusta Coffee, Copper, Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.29% higher; to see this index registered at 428.73. The day starts with the U.S. Dollar tending softer and trading at 1.402 to Sterling, at 1.233 to the Euro and with the dollar buying 3.237 Brazilian Real, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 67.65 per barrel.

The London market and New York markets started the day on Friday trading around par and mostly modestly buoyant over par, to see both markets hold on this track, into the early afternoon trade. As the afternoon progressed both markets started to attract further support and to move up into positive territory and with the New York market posting gains of 1.90 usc/Lb. and the London market of $ 11.00 per Mt., but with the markets hitting a ceiling and both markets taking a steady track south and into negative territory for the London market, while the New York markets returned to par.

The London market ended the day on a negative note and with 88.9% of the losses of the day intact, while the New York market ended the day on a steady note but having shed 94.7% of the earlier gains of the day by the close. This close does little to inspire, but one might think that with the combination of evidence of the rising net short sold positions within the markets and the softer U.S. dollar in play shall assist towards some degree of hesitant buoyancy for the markets for early trade today, against the prices set on Friday, as follows:

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

MAR 1793 – 8                                                MAR 119.45 – 0.15
MAY 1751 – 8                                                MAY 121.00 + 0.10
JUL 1779 – 7                                                  JUL 123.15 + 0.15
SEP 1782 – 7                                                  SEP 125.35 + 0.10
NOV 1786 – 8                                                DEC 128.65 + 0.05
JAN 1793 – 8                                                 MAR 131.95 unch
MAR 1803 – 6                                                MAY 133.95 – 0.05
MAY 1821 – 2                                                JUL 135.75 – 0.05
JUL 1842 – 2                                                  SEP 137.40 – 0.10
SEP 1845 – 2                                                  DEC 139.90 – 0.05