Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
December 05 2017
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 13.68% over the week of trade leading up to Tuesday 28th. November; to register a new net short sold position of 40,766 Lots. Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 2.08%, to register a net long position of 37,583 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 14.33%, to register a net short sold position of 41,862 Lots. This net short sold position which is the equivalent of 11,867,691 bags has most likely been once again increased, following a period of mixed but overall more negative sideways trade that has since followed and likewise, that of the managed money fund sector of the market.
The National Coffee Institute of Costa Rica have reported that the country’s coffee exports for the month of November were approximately 11,786 bags of 53% higher than the same month last year, at 34,024 bags. This has contributed to the countries cumulative coffee exports for the first two months of this new October 2017 to September 2018 coffee year to be approximately 5,179 bags or 12% lower than the same two-month period in the previous coffee year, at a total of 48,334 bags.
It is of course early days still in terms of the new crop harvest in Costa Rica and a harvest that has widely been forecasted to be a larger new crop and thus while the exports for the first two months of the present coffee year are relatively modest, there are expectations that the volumes compared to the previous coffee years performance, shall prove to be more impressive. Despite the unattractive price levels that the prevailing soft reference prices with the New York market are dictating, for the Costa Rican farmers and exporters.
The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of November was 349.000 bags or 21.11% lower than the same month last year, at a total of 1,304,000 bags. This has contributed to the countries cumulative production for the first two months of the present October 2017 to September 2018 coffee year to be 671,000 bags or 22.01% lower than the same period in the previous coffee year, at a total of 2,377,000 bags.
The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of November were 79.000 bags or 6.33% lower than the same month last year, at a total of 1,169,000 bags. This has contributed to the countries cumulative coffee exports for the first two months of the present October 2017 to September 2018 coffee year to be 173,000 bags or 6.93% lower than the same period in the previous coffee year, at a total of 2,324,000 bags.
This dip in both production and exports over the past two months in Colombia and during the early months of new main crop harvest has been expected, as there have been many reports and including from the Colombian Coffee Federation, that heavy rain showers and cloudy weather have had an impact upon the ripening of the new crop cherries and a slower start to the new crop harvest. The question being if the this month and over the next two months, shall see catch up higher volumes of production coming to the fore, as so far the prospects of a slower start to the new main crop harvest has seemingly not provided for much in the way of supportive sentiment for the speculative sector within the related New York arabica coffee market.
The Brazilian trade house Comexim who had estimated this year’s Brazil harvest to have been only 49.4 million bags and made up from 38.8 million bags of arabica coffees and 10.6 million bags of conilon robusta coffees, have commented on Reuters that they foresee the possibility that so long as there are no unforeseen climatic problems to the fore, that the next 2018 Brazil coffee crop might even exceed 60 million bags. This increase related to not only the generally expected larger new arabica coffee crop, but also to a significantly larger new conilon robusta coffee crop.
The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 50.48 usc/Lb., while this equates to 39.28% 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 333 bags yesterday; to register these stocks at 1,927,349 bags. There was meanwhile a larger in number 3,260 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,585 bags.
The commodity markets were mostly on the back foot yesterday, to see the overall macro commodity index taking a softer track for the day. The Sugar and Soybean markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, 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 0.73% lower; to register this index at 419.19. The day starts with the U.S. Dollar steady and trading at 1.344 to Sterling and at 1.187 to the Euro, while North Sea Oil is steady and is selling at US$ 63.05 per barrel.
The London market started the day yesterday on a relatively steady note and trading mostly close to par, while the New York market started the day marginally south of par and with both market maintaining this stance, into the early afternoon trade. As the afternoon progressed both markets started to attract some support and to move back into positive territory but perhaps with the negative nature of the overall macro commodity index having some influence this was not sustained, as both market once again came under pressure and fell back into negative territory for the later in day trade.
The London market ended the day on a very negative note and with 88.2% of the earlier losses of the day intact, while the New York market ended the day on a negative note and with 70% of the earlier losses of the day intact. This close does little to inspire and tends to start to paint something of a negative picture for the charts, but one might think that there shall be a degree of caution and a hesitant steady start for early trade today against the prices set yesterday.