20 Jul 2020
The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector cut their net short position within the market by 0.51% over the week of trade leading up to Tuesday 14th. July: to register a new net short sold position of 23,722 Lots which is the equivalent of 6,725,082 bags. This net short position has most likely been little changed, following the period of mixed but overall sideways trade that has since followed.
The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this market cut their net short sold position within the market by 6.41% over the week of trade leading up to Tuesday 14th. July; to register a short-sold position of 41,654 Lots.  This net short sold position is the equivalent of 6,942,333 bags and has most likely been further increased following the period of mixed but overall sideways trade that has since followed.
The analysts Safras & Mercado have estimated that almost 63% of the new Brazil coffee crop has already been harvested. This based on the Safras & Mercado forecast for a new crop of 68 million bags, the report would indicate that so far approximately 43 million bags of the new crop have been harvested. These coffees made up from approximately 16 million bags of conilon robusta coffees and approximately, 27 million bags of arabica coffees.
The Brazil harvest this year is at a slower pace, compared to the same week in 2019 when approximately 75% of the crop was harvested, although the size of this biennial bearing larger crop can be attributed to the slower harvest time this year. This week temperatures are forecast to be low throughout the Southeast regions of the Coffee Belt but with little to no risks of frost brought with the cooler weather. The conditions remain dry over much of the Brazil coffee belt, with some scattered rains on the coastal areas between North Espirito Santo and South of Bahia.
The National Coffee Institute of Costa Rica (ICAFE), has come forth with their forecast for coffee production for the upcoming October 2020 to September 2021 coffee year, which they foresee to be 8.20% or 160,960 bags more than the previous year production, at an estimated total 2,1 million bags. The harvest will begin in the lower southern regions and move towards the higher altitude regions towards the end of the year. There is no doubt however, that this producer along with surrounding neighbouring Central American washed arabica coffee producers, have sustained loss making prices over the past three years of low returns against the reference prices on the New York futures markets, despite the considerable recognition these washed arabica coffees hold in the specialty markets. A general consensus therefore, which is supported by a number of independent crop research reports are factoring in the challenges of a lack of affordability for inputs ahead of the coming crop for such higher cost washed arabica producer countries and for Costa Rica, independent forecasters are on the lower side of their national institute, with estimates for the Costa Rica coffee production for the October 2020 to September 2021 coffee year, to come in at a lower overall 1,5 to 1,7 million bags.
The September to September contract arbitrage between the London and New York markets widened on Friday; to register this at 43.65 usc/Lb. This equates to 42.67% price discount for the London Robusta coffee market.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 16,599 bags on Friday to register these stocks at 1,598,597 bags, with 93.8% of these certified stocks being held in Europe at a total of 1,500,005 bags and the remaining 6.2% being held in the USA at a total of 98,592 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 19,146 bags.
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