Coffee Traders' Forum - A Discussion about Coffee Futures Trading
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Coffee Market Report
January 08 2018
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 16.52% during the week of trade leading up to Tuesday 2nd. January; to register a net short sold position of 48,883 Lots on the day. This net short-sold position which is the equivalent of 13,858,114 bags has most likely been little changed to perhaps increased marginally, following the period of mixed but overall softer 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 5.3% during the week of trade leading up to Tuesday 2nd. January; to register a net short sold position of 26,888 Lots on the day. This net short sold position which is the equivalent of 4,481,333 bags has most likely been little changed, following a period of mixed and overall sideways trade, which has since followed.
The International Coffee Organisation have reported that global coffee exports during the month of November were 9.2% lower than the same month in the previous year, at a total of 9.02 million bags. This lower performance they say, contributes to the cumulative global coffee exports for the first two months of the new October 2017 to September 2018 coffee year to being 11.3% lower than the same period in the previous coffee year, at a total of 17.62 million bags.
The news of lower export volumes over October and November last year was to have been expected, as it was a period through which export volumes from Brazil where the combination of a lower arabica coffee crop, internal market price resistance and disruptions within the port of Santos had reduced and slowed coffee exports out of Brazil. While with much diminished carry over coffee stocks into a delayed new crop in Vietnam, the coffee export volumes out of Vietnam were also sharply reduced over this period. As were exports from a partially delayed new main crop in Colombia, also lower for this period.
But one might comment that the dip in global coffee exports over October and November last year that saw global coffee exports dip by approximately 2.25 million bags, was against what most would consider to be excessive mainstream consumer market stocks, which were perhaps as much as 3 to 4 million bags more than necessary. Thus, and with the prospects for the new Vietnam, Mexican, Central American, Colombian and Indian crops now coming to the consumer market, there really is no reason for any concern over the latest coffee export data. Albeit that due to the prevailing soft nature of the reference prices within the coffee terminal markets, one can expect many farmers within the producer countries to show a degree of price resistance and one might therefore, not expect to see a significant flood of new crop coffees coming to the consumer markets.
The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 50.25 usc/Lb., while this equates to 39.12% 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 4,890 bags on Friday; to register these stocks at 1,987,795 bags. There was meanwhile a larger in number 15,190 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 41,575 bags.
The commodity markets had a mostly softer day on Friday, with the overall macro commodity index taking a softer track for the day. The Soybean and Silver markets nevertheless has a day of some modest buoyancy and the Corn and Gold markets were steady for the day, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice and Wheat markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.63% lower; to register this index at 423.03. The day starts with the U.S. Dollar steady and trading at 1.356 to Sterling, at 1.202 to the Euro and 3.229 to the Brazilian Real, while North Sea Oil is steady and is selling at US$ 68.20 per barrel.
The London market started the day on Friday on a steady note and with a degree of modest buoyancy, while the New York market started the day close to par, but with the latter New York market soon dipping lower into negative territory and the London market trading either side of par. The markets retained this stance and within an environment of thin trade into the afternoon and as the afternoon progressed to see the London market post a short lived modest recovery, while the New York market and with perhaps the negative influences of the softer overall macro commodity index playing a part, remained within softer territory for the day.
The London market ended the day on a modestly negative note and with 57.1% of the earlier losses of the day intact, while the New York market ended the day on a negative note and with 66.7% of the earlier losses of the day intact. This close provides very little in the way of direction and one might suspect that with the evidence of a lower but still substantial speculative net short sold position with the New York market, that there might be a degree of caution and something of a steady start due for both markets for early trade today, against the prices set on Friday.