Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
December 04 2017
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 14.33% during the week of trade leading up to Tuesday 28th. November; to register a net short sold position of 41,862 Lots on the day. This net short-sold position which is the equivalent of 11,867,691 bags has most likely been little changed to perhaps marginally increased again, following the period of mixed but overall somewhat sideways 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 42.68% during the week of trade leading up to Tuesday 28th. November; to register a net short sold position of 20219 Lots on the day. This net short sold position which is the equivalent of 3,369,833 bags has most likely been little changed to perhaps marginally increased again, following a period of mixed but overall sideways trade, which has since followed.
The Indonesian government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of November were 298,177 bags or 57.27% lower than the same month last year, at a total of 222,460 bags. This number and following a similarly modest export performance for the previous month has contributed to the cumulative coffee exports for the first two months of the present October 2017 to September 2018 coffee year to be 743,766 bags or 64.77% lower than the same period in the previous coffee year, at a total of 404,483 bags.
The drying up of Indonesian robusta coffee supply is however not foreseen to be an issue on the part of the consumer market industries, as with the prospects for a new and larger Vietnam robusta coffee crop that is now starting to come into play, focus is now upon a good and steady supply of Vietnam robusta coffees for the coming months.
The respected U.S. Department of Agriculture USDA Global Agricultural Information Network have come to the fore with a forecast that foresees that the new Vietnam coffee crop shall be 3.2 million bags or 11.98% higher than the previous crop, at a total of 29.9 million bags. This increase they relate to 3 million bags increase in the size of the new robusta coffee crop that they now foresee to be 28.6 million bags, while they foresee the new arabica coffee crop to increase by 200,000 bags to 1.3 million bags.
This latest USDA report estimates domestic coffee consumption at 2.88 million bags per annum and therefore would by nature of this, indicate that Vietnam has a coffee export potential of close to 27 million bags of coffee for this new October 2017 to September 2018 coffee year. However, one might suggest and presuming these figures are close to reality, that with the country having liquidated most of its coffee stocks ahead of the new coffee year and harvest, that the reality would be that Vietnam in terms of the combination of both green coffees and value added soluble coffee exports for the present coffee year, might only be inspired to export closer to 25 million bags of coffee during the present coffee year. It is nevertheless, a somewhat bearish report for market sentiment, within the London robusta coffee market.
The Ministry of Trade in Brazil have reported that the countries coffee exports for the month of November were 303,734 bags or 10.13% lower than the same month last year, at a total of 2,695,749 bags. This lower performance in terms of most of these exports being related to arabica coffees and following a smaller new arabica coffee crop harvest this year, was very much expected. Especially so as aside from marginally tighter supply, there has been little inspiration for selling in terms of the prevailing soft nature of the international market prices.
The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 50.17 usc/Lb., while this equates to 38.73% 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 5,937 bags on Friday; to register these stocks at 1,927,016 bags. There was meanwhile a smaller in number 2,179 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,325 bags.
The commodity markets were mostly showing a degree of buoyancy on Friday, with the overall macro commodity index taking a positive track for the day. The Oil, Natural Gas, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean and Gold markets had a day of buoyancy, while the Sugar, Cocoa and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.72% higher; to register this index at 422.26. The day starts with the U.S. Dollar showing a degree of buoyancy and trading at 1.343 to Sterling and at 1.184 to the Euro, while North Sea Oil is near to steady and is selling at US$ 63.95 per barrel.
The London and New York market started the day on Friday on a steady note and within an environment of thin trade and to see, both markets taking a modest positive stance into the early afternoon trade. As the afternoon progressed and shrugging off a short term negative move within both markets the markets move back up into positive territory and with the London market taking a steady upside track for the rest of the day, while the New York market took more of a sideways positive track through to the close.
The London market ended the day on a very positive note and with 83.9% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 58.3% of the earlier gains of the day intact. This close and while constructive, does little to inspire much confidence and one might expect that following the somewhat negative nature of the USDA Vietnam report, to see a softer start due for the London market and perhaps a steady start for the New York market for early trade today, against the prices set on Friday.