12 Jan 2021
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 cut their net long position within this market by 0.15% over the week of trade leading up to Tuesday 5th. January; to register a new net long position of 22,057 lots. Meanwhile the longer term in nature Index Fund sector of this market raised their net long position within the market by 3.65%, to register a net long position of 62,696 Lots on the day.
Over the same week, the Non-Commercial Speculative sector of this market cut their net long position within the market by 5.56% to register a new net long position of 21,837 Lots which is the equivalent of 6,190,693 bags. This net long position has most likely been decreased, following the period of mixed but overall softer trade that has since followed.
The well-respected United States Department of Agriculture USDA Foreign Agricultural Service have decreased their forecast for global coffee supply for the present October 2020 to September 2021 coffee year by 0.34% to now forecast global coffee supply at 175.50 million bags. While they have forecast that global coffee demand for the same period shall be 165.40 million bags.
This forecast would indicate the potential for a global surplus coffee supply of 10.10 million bags, which comes in over and above what is seen to be still reasonable consumer market stock levels, and could potentially dampen sentiment of the speculative and fund sector of the coffee markets. With the spring and summer rain season in Brazil forecasts indicating that the rains have returned to normal, indicating the prospects are good for the next, biennial bearing lower 2021 Brazil coffee crop.
The Brazil Real has registered a softer trend to start the New Year, against the U.S. Dollar, with the relatively soft nature of the reference prices of the New York market and with the record 2020 Brazil crop that has been harvested. These coffees continue to flow to consumer markets in record numbers, and yesterday marked the seventh consecutive day of increases registered to the certified washed arabica stocks, and remains a bearish factor for the markets in the short term.
The March 2021 to March 2021 contract arbitrage between the London and New York markets widened yesterday: to register this at 61.80 usc/Lb. This equates to 50.89% 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 30,315 bags yesterday, to register these stocks at 1,497,338 bags, with 94.3% of these certified stocks being held in Europe at a total of 1,412,245 bags and the remaining 5.7% being held in the USA at a total 85,093 bags. There was meanwhile a larger number 33,861 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 107,246 bags.
It was a softer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a soft sideways track for the day. The Sugar market ended the day on a positive note, while the Cocoa and Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.9032% lower; to see this index registered 465.0901. The day starts with the U.S. Dollar, trading at 1.354 Sterling, at 1.215 the Euro and with the US Dollar buying 5.489 Real.
The New York and London markets started the day yesterday trading on a modest softer note, both markets continued on this softer track for the early morning session. Late in the morning session saw a brief recovery for the markets, however this was short lived as both the New York and the London markets soon hit a ceiling to limit the gains for the morning. As the afternoon progressed both markets continued to fall back accentuating the losses for the day, the markets hit a floor and recovered to a degree toward the end of the session, to see the New York market settle on a softer note for the day and the London market following suit in a more sedate manner, settling near to unchanged for the day.
The London market ended the day on a negative note with 13.64% of the earlier losses of the day intact, while the New York ended the day on a modest positive note with 45.45% of the earlier gains of the day intact. This softer close does little to indicate direction and one might think that the markets are due for a little better than a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAR 1315 – 3 MAR 121.45 – 2.25
MAY 1326 – 3 MAY 123.55 – 2.20
JUL 1342 – 2 JUL 125.40 – 2.20
SEP 1361 – 2 SEP 127.15 – 2.20
NOV 1380 – 1 DEC 129.25 – 2.10
JAN 1396 – 1 MAR 131.10 – 2.05
MAR 1412 – 1 MAY 131.95 – 2.00
MAY 1429 – 1 JUL 132.80 – 1.90
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