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 short sold position within the market by 7.76% over the week of trade leading up to Tuesday 22nd. May; to register a new net short sold position of 46,174 Lots. Meanwhile the longer term in nature Index Fund sector of this market trimmed their net long position within the market by 1.13%, to register a net long position of 34,302 Lots on the day.
Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 6.47%, to register a net short sold position of 46,710 Lots. This net short sold position which is the equivalent of 13,242,078 bags has most likely been marginally decreased again, following the period of mixed but modestly buoyant trade that 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 decrease their net short sold position within this market by 23.46% during the week of trade leading up to Tuesday 22nd. May; to register a net short sold position of 10,726 Lots on the day. This net short sold position which is the equivalent of 1,787,666 bags is likely to be little changed to nominally lower, following a period of mixed trade which set out on a buoyant note, as has since followed.
The respected U.S. Department of Agriculture Global Agricultural Network USDA have reported their forecast for the exclusively arabica coffee crop to come from Honduras for the forthcoming October 2018 to September 2019 coffee year, at an anticipated 2% decrease on that of the previous record coffee production year. This new crop that is due to start harvest toward the end of the year, is forecast to come in at 7.36 million bags, which shall follow the officially revised production estimate of this year by the National Coffee Growers Institute, for an October 2017 to September 2018 coffee crop that was estimated at 7.7 million bags to now be estimated at 7.4 million bags. The USDA have put forward primary reasons for their forecast for the coming crop to be a year on year decline in production, due to factors of higher input costs that are exacerbated by the ongoing battle against leaf rust, countered by a lack of access to credit for mainly small grower sector in combination with prevailing lower coffee price conditions. Of this new crop to come, the forecast is that Honduras will export 7 million bags while local consumption is considered to be growing from a low base, the sector made up of a combination of imported soluble products as well as local and imported roast and ground coffee products forecast by the USDA to be in the region of 358,000 bags in the 2018/2019 coffee year.
The U.S. Department of Agriculture Global Agricultural Network USDA have reported their forecast for the exclusively arabica coffee crop to come from Ethiopia for the forthcoming October 2018 to September 2019 coffee year, to be largely unchanged from the same period last year, at 7.11 million bags. The USDA report has further increased their official estimate of 6.54 million bags for the period October 2017 to September 2018, to reach a higher 7.05 million bags, citing conducive weather conditions and in particular, good and on time rainfall across most growing areas to set the current crop. The USDA have made note in this latest report that while the indications for the coming year are for a similar crop, there are isolated reports of small growers moving to more profitable crops, which underlines the challenges that coffee producers are encountering globally, against the prevailing negative price dictates of the coffee terminal markets. Of the new crop that is to come later in the year, the forecast is that Ethiopia will export 3.98 million bags, whereas local consumption is made up entirely of local coffee production, entrenched in historical tradition that is complimented by a growing urban coffee shop presence, is forecast by the USDA to be in the region of 3.12 million bags in the coming 2018/2019 coffee year.
The most recent round of concessions that has been offered and enacted by the President’s office in Brazil, in an effort to end the nationwide truckers strike, has shown only limited results after the news issued on Sunday. The lack of delivery of goods and services by this major agriculture producer, to their own domestic and international consumer markets has resulted in significant and unanticipated internal disruptions. While the increasing cost and scale of the protest strike action that is preventing exports of all commodities and finished goods into and out of the country through main ports, is being closely monitored by the markets and is contributing toward a degree of uncertainty as time passes without apparent resolute action.
Following the first session of the week yesterday for both markets, the July 2018 to July 2018 contracts arbitrage between the London and New York markets widened, to register this at 41.28 usc/Lb., while this equates to 34.32% 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 1,032 bags yesterday; to register these stocks at 2,012,539 bags. There was an increase by 1,227 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 51,394 bags.
The commodity markets were mixed in trade yesterday, as the news of political uncertainty from Italy and Spain, weighed in on sentiment, the Euro fell against other major currencies, while the US Dollar gained ground. It was a mixed day for the Oil markets, as well as Corn, Wheat and Soybean markets, Cocoa, Coffee, Copper, Silver and Palladium markets which ended the day on a softer note. It was a positive day for investor safe haven metal Gold, Cotton, with Sugar and Platinum markets mildly positive on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets settled 0.4128% lower; to see this index registered at 438.12. The day starts with the US Dollar firmer and trading at 1.325 to Sterling, at 1.153 to the Euro, and the US Dollar buying 3.725 Brazilian Real, while North Sea Oil edges lower, selling at US$ 74.50 per barrel.
The markets opened the day on a mildly softer note in London and a comparatively more aggressive lower opening in New York, the news of a prospective end to the truckers strike in Brazil weighing in on speculative sentiment, while the strengthening US Dollar and speculative uncertainty within the commodities sector contributing toward the softer track for the softer track in the early morning session. It was a muted volume day for London which settled within a mildly softer and narrow range for the better part of the session, to finish in negative territory. The session in New York kicked off with good volume although in a narrow and negative range once the floor was set in the early part of the day. Underlying buyer support returned to floor as North America opened for their business day, to drive the market briefly back into positive territory, but with sellers waiting above the market, a break below par and back into negative territory ensued. The session settled into marginally softer territory for the rest of the session, with volumes thinning out in both markets toward the end. The markets set the close yesterday, after a relatively flat and thin session in London and choppy but mostly softer day in New York, new to the days low in London and at the higher end of the range in New York, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAY 1709 – 11
JUL 1741 – 11 JUL 120.25 – 0.15
SEP 1728 – 10 SEP 122.40 – 0.25
NOV 1734 – 8 DEC 125.95 – 0.25
JAN 1737 – 7 MAR 129.35 – 0.30
MAR 1746 – 6 MAY 131.60 – 0.25
MAY 1753 – 7 JUL 133.55 – 0.25
JUL 1759 – 6 SEP 135.35 – 0.25
SEP 1771 – 6 DEC 137.95 – 0.30
NOV 1783 – 5 MAR 140.55 – 0.35