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Coffee Market Report
May 14 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 8.14% during the week of trade leading up to Tuesday 8th. May; to register a net short sold position of 41,785 Lots on the day. This net short-sold position which is the equivalent of 11,845,862 bags has most likely been little changed to perhaps marginally increased again, following the period of mixed but overall relatively bearish sideways 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 decrease their net short sold position within this market by 69.37% during the week of trade leading up to Tuesday 8th. May; to register a net short sold position of 3,804 Lots on the day. This net short sold position which is the equivalent of 634,000 bags has most likely been marginally increased again, following the period of mixed but overall negative trade, which has since followed.

It remains for the present a coffee market that suffers from the no news is good news factor and with the general perception for rising global coffee supply for the second half of the year, as against not threatening weather related issues for short to medium term global coffee production. There is though the Brazil frost season on the nearby horizon but with twenty-four years having passed since the last severe frosts for the Brazil coffee districts, few show any concern over this factor and see this as a threat.

Albeit that frost within some of the Brazil coffee districts is not impossible but should such an unlikely but possible event occur, it would most certainly be a factor that would immediately wake up and excite the markets. Bringing to the fore some dramatic short covering activity for the New York market and with no doubt, the London market following the bullish track set by this market.

The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 39.66 usc/Lb., while this equates to 33.22% 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 4,900 bags on Friday; to register these stocks at 1,999,165 bags. There was meanwhile a larger in number 8,870 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 59,544 bags.

The commodity markets were mixed but with many markets tending softer for the day on Friday, to see the overall macro commodity index taking a softer track for the day. The Cocoa, London robusta Coffee and Orange Juice markets ended the day on a positive note and the Copper market on a steady note, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.31% lower; to see this index registered at 436.34. The day starts with the U.S. Dollar tending marginally softer and trading at 1.356 to Sterling, at 1.197 to the Euro and with the dollar buying 3.598 Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 76.80 per barrel.

The London market started the day on Friday trading with some modest buoyancy, while the New York market started the day trading marginally south of par and with both markets maintaining this stance, into the early afternoon trade. As the afternoon progressed the London market continued to trade mostly to the positive side of par, while the New York market and with the negative influences of both the weaker Brazil and Colombian currencies having an effect, remained mostly south of par for what proved to be a lacklustre day for both markets.

The London market ended the day on a positive note and with 78.9% of its modest gains for the day intact, while the New York market ended the day on a near to steady note and having recovered 80% of the earlier modest losses of the day. This close while doing little to inspire does likewise provide little indication of direction and one might think that following the return to work by many major European trade and industry players who had taken an extended Ascension Day long weekend, that there might be some light industry support due today and to assist the markets towards a hessitantly steady start against the prices set on Friday.