Coffee Traders' Forum - A Discussion about Coffee Futures Trading
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Coffee Market Report
January 02 2018
The 2017 year has ended with the Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets flat and ending the year only 0.017% lower from the end of the previous year, but with the coffee terminal markets having fared worse than the overall mix of commodity markets. The New York arabica coffee market ending the year 7.92% lower and the London robusta coffee market an even more dramatic 19.64% lower, that the end of the previous year.
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 0.86% during the week of trade leading up to Tuesday 26th. December; to register a net short sold position of 58,558 Lots on the day. This net short-sold position which is the equivalent of 16,600,933 bags has most likely been since reduced a little, following the period of more positive trade that 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 December were 350,761 bags or 70.87% lower than the same month last year, at a total of 144,152 bags. This number and following a similarly modest export performance for the previous couple of months has contributed to the cumulative coffee exports for the first three months of the present October 2017 to September 2018 coffee year to be 1,094,527 bags or 66.61% lower than the same period in the previous coffee year, at a total of 548,635 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.
There is likewise seemingly no major concern on the part of the consumer market industries in terms of medium term arabica coffee supply, as they continue to draw upon good levels of mainstream consumer market arabica coffee stocks, while looking to the fore in terms of the forecast for an overall larger new Mexican and Central American fine washed arabica coffee crop. This new crop presently in full harvest and with exports from this new crop, already starting to be shipped.
The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 48.27 usc/Lb., while this equates to 38.25% 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 1,339 bags on Friday; to register these stocks at 1,973,669 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 56,765 bags. These stocks having ended the year 2017 728,290 bags or 58.48% higher than their level, at the end of the previous year.
The commodity markets had a mixed but with the U.S. dollar coming under further pressure to assist within many markets, a mostly positive day on Friday and to see the overall macro commodity index taking a positive track for the day. The Oil, Sugar, Coffee, Gold and Silver markets had a day of buoyancy, while the Cocoa and Copper markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.89% higher; to register this index at 420.57. The day starts with the U.S. Dollar steady and trading at 1.352 to Sterling, at 1.202 to the Euro and 3.312 to the Brazilian Real, while North Sea Oil is steady and is selling at US$ 67.25 per barrel.
The London and New York markets started the day on Friday with modest buoyancy and with both markets remaining north of par, into the early afternoon trade. As the afternoon progressed and with the London market looking towards an early close for the day the markets continued to remain close to par but with a little bit of pressure coming to the fore and forcing both markets to dip into modest negative territory, but this was short lived and the markets soon recovered and setting both markets for a positive end to the day.
The London market ended the day on a modestly positive note and with 42.9% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 80% of the earlier modest gains of the day intact. This close and with the charts tending to paint a modestly positive picture for both markets and along with the further evidence of the extensive net short positions being held within the New York market, is likely to assist towards a degree of confidence and to set the markets for a follow through steady start for early trade today against the prices set on Friday.