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Coffee Traders' Forum

SCASA

October 09 2017

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 73.67% during the week of trade leading up to Tuesday 3rd. October; to register a net short sold position of 31,039 Lots on the day. This net short-sold position which is the equivalent of 8,799,419 bags has most likely been decreased again, 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 4,152.63% during the week of trade leading up to Tuesday 3rd. October; to register a net short sold position of 2,424 Lots. This net short sold position which is the equivalent of 404,000 bags has most likely been little changed to possibly marginally degreased again, following the period of mixed but modestly more positive trade, which has since followed.

The respected Brazilian related coffee importers Wolthers Douque USA were reported on Reuters on Friday that they foresee weather permitting, that Brazil might be due for a surplus coffee crop of 59.02 million bags in 2018. This would if it proves to be true and with a domestic demand now estimated by the local industry at approximately 22 million bags, leave over 37 million bags available for export and for the rebuilding of the now much depleted stocks.

The question is thought what shall the weather in Brazil bring as following last week’s good overall rains this week is expected to be generally dry, but with forecasts for more rains to come into play for the coming week and in good time, to assist to set the new crop flowerings. But it is early days and one can expect to see many Brazil weather related reports coming to the fore for the last quarter of this year, to support a degree of volatility for the terminal markets. In this respect, one would think the New York market, more so than the more stable London market.

Tropical Storm Nate which impacted quite severely over most of Central America last week had brought with it heavy rains and has with the accompanying floods and landslides, some damage to internal market road infrastructure. However in terms of the maturing new coffee crops from the region the reports so far, would indicate that there has been very little in the way of cherry drop and damage to the potential for an overall larger new crop from the region.

The January 2018 to December 2017 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 39.78 usc/Lb., while this equates to 30.6% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 330 bags on Friday; to register these stocks at 1,841,876 bags. There was meanwhile a larger in number 2,959 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 63,707 bags.

The commodity markets were mixed but weighted towards a negative trend on Friday, to see the overall macro commodity index taking a softer track for the day. The Cocoa, Coffee, Gold and Silver markets nevertheless had a day of buoyancy, while the Oil, Sugar and Copper markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.44% lower, to see this Index registered at 408.60. The day starts with the U.S. Dollar near to steady and trading at 1.310 to Sterling and at 1.173 to the Euro, while North Sea Oil is steady and is selling at US$ 55.95 per barrel.

The London and New York markets started the day on Friday with a degree of buoyancy and with both markets taking a positive track into the early afternoon trade, with the New York market proving to be the more robust player and adding value as the afternoon progressed. The New York market stalled briefly but this was short lived and with buy stops being triggered lifted itself to a higher platform, which was followed by more modest gains for the London market, before both markets took a positive sideways track through to the close.

The London market ended the day on a positive note and with 84.6% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 80% of the earlier gains of the day intact. This close shall perhaps assist to paint a more positive technical picture for the markets but with the markets still lacking strong fundamentally supportive news for the present, one might expect the markets to be only hesitantly steady for early trade today, against the prices set on Friday.