Coffee Traders' Forum - A Discussion about Coffee Futures Trading


Coffee Traders Discussion Forum

Coffee Traders' Forum

SCASA

Coffee Market Report
January 05 2018

The coffee markets are presently devoid of any new striking fundamental news and with the present medium to longer term fundamentals for the market remaining relatively negative for market sentiment, in terms of speculation that with the new Mexican and Central American harvest in progress, that this overall crop of mostly fine washed arabica coffees might even exceed a record 21 million bags. Over and above the close to completion new Vietnam crop that is dominated by robusta coffees, which is also forecast to be a much larger new crop than last.

While the latest reports in terms of the mild La Niña phenomenon that is being experienced within the Pacific Ocean, the indications are that it is likely to fade away within the next couple of months. The mild nature of this La Niña tending to indicate no severe weather threats for the South East of Brazil and the countries main coffee producing districts, which with reasonable rains having been experienced over the past few months, continues to fuel forecasts for a much larger new Brazil coffee crop for this year.

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 51.17 usc/Lb., while this equates to 39.5% 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 3,525 bags yesterday; to register these stocks at 1,982,905 bags. There was meanwhile a smaller in number 3,230 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 56,765 bags.

The Certified Robusta coffee stocks held against the New York exchange were seen to decrease by 68,333 bags or 3.28% over the shortened week of trade leading up to Tuesday 2nd. January, to see these stocks registered at 2,014,000 bags, on the day.

The commodity markets had a mixed day yesterday, but despite the support within the markets from a slightly weaker U.S. dollar, the overall macro commodity index took a marginally softer track for the day. The Oil, New York arabica Coffee, Cotton, Copper, and Gold markets had a day of buoyancy and the Orange Juice markets was steady for the day, while the Natural Gas, Sugar, Cocoa, London robusta Coffee, Wheat, Corn, Soybean and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.1% lower; to register this index at 425.70. The day starts with the U.S. Dollar steady and trading at 1.357 to Sterling, at 1.207 to the Euro and 3.234 to the Brazilian Real, while North Sea Oil is steady and is selling at US$ 68.85 per barrel.

The London and New York markets started the day yesterday marginally south of par, but while the London market soon recovered to trade in modest positive territory, the New York market remained within modest negative territory into the early afternoon trade. As the afternoon progressed the New York market started to extend its losses and followed by the London market which with some producer selling pressure coming into play, joined the New York market within negative territory. The markets did however experience a late in the day recovery, but with the London market nevertheless ending off the day within negative territory, while the New York market managed to show some late in the day muscle.

The London market ended the day on a negative note and with 35% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 90.5% of the earlier gains of the day intact. This late in the day recovery for the New York market and its ability to end the day near to the highs of the day, might well assist towards a degree of modest confidence and one might expect to see a steady start due for early trade today, against the prices set yesterday.