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Coffee Market Report
March 13 2018

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 4.45% over the week of trade leading up to Tuesday 6th. March; to register a new net short sold position of 54,004 Lots. Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.69%, to register a net long position of 40,520 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 4.93%, to register a net short sold position of 50,727 Lots. This net short sold position which is the equivalent of 14,380,880 bags has most likely been increased, following a period of mixed but overall more negative trade that has since followed and likewise, that of the managed money fund sector of the market.

This latest Commitment of Traders report provides little new for the market, as it would seem to be nothing other than an indication that focus remains firmly upon the prospects for rising coffee supply for the second half of the year, along with the prospects for a significantly larger new Brazil coffee crop.

But it is perhaps remarkable that despite the much larger new Vietnam crop and the resulting good volumes of robusta coffee exports that are coming to the market and with the further prospects for a larger new and surplus to domestic market demand Brazil conilon robusta coffee crop that is likely to bring good volumes of these coffees to the consumer markets, that the London market is holding relatively steady for the present.

There are though and aside from the new Vietnam and Indian robusta coffee crops that presently coming to the market, the prospects for the new Indonesian and Ugandan robusta coffee crop to start to pick up in volume by July, which shall be accompanied by the surplus Brazil conilon robusta coffees that might be looing for a home within the consumer markets. Thus, one might speculate that with these additional coffees coming to the fore and with them increased volumes of price fixation selling in the London market, that it might contribute to a broadening of the arbitrage between the London and New York markets.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 39.21 usc/Lb., while this equates to 32.83% 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 3,749 bags yesterday; to register these stocks at 1,912,687 bags. There was meanwhile a smaller in number 1,624 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 43,061 bags.

The commodity markets were mixed in trade yesterday but with the influential Oil markets once again slipping back, to assist to set the overall macro commodity index for a softer track for the day. The Natural Gas, Sugar, Cocoa, Wheat and Soybean markets had a day of buoyancy, while the Oil, Coffee, Cotton, Copper, Orange Juice, 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 0.10% lower; to see this index registered at 429.94. The day starts with the U.S. Dollar steady and trading at 1.389 to Sterling, at 1.232 to the Euro and with the dollar buying 3.261 Brazilian Real, while North Sea Oil is tending marginally softer and is selling at US$ 64.55 per barrel.

The London market started the day on a softer note yesterday and the New York market started the day marginally south of par, to see the markets hold this track towards the early afternoon trade, but with the New Market soon slipping back and to join the London market in negative territory. Both markets lost some more weight but managed to bounce back from the lows, but nevertheless with the markets heading towards a soft close for the day.

The London market ended the day on a negative note and with 47.8% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note, with 56% of the earlier losses of the day intact. This close does not assist to paint a positive picture for the charts, but with the markets close to the bottom of the prevailing trading range, there might be some degree of caution on the part of the bears, to set the markets for a hesitant near to steady start for early trade today against the prices set yesterday.