Coffee Update
August 03, 2011
Here is the most recent coffee report we have received, dated July 29, 2011:
"The increasing concerns of debt issues on both sides of the Atlantic continue to lead to unstable trading in all commodities. Arabica ICE futures were little changed. The threat of a frost in Brazil is no longer a driver for the upside. The September position hit a six-month low on Thursday. Friday, a weak dollar brought a few investors back into the market. London continues to be steady on continued supply concerns.
Fundamental Analysis & News
- Arabica futures fell to six-month lows on Thursday.
- The threat of frost in Brazil has subsided. Farmers are well-financed and able to delay selling into a falling market. This keeps the differential for Brazil firm for nearby shipment.
- On Monday, speculators increased their short position in ICE Arabica coffee futures to the biggest in 2.5 years.
- Robusta differentials remain at historically high levels. Big demand by roasters for Robusta and low stocks at origin in Vietnam and Indonesia are the reasons noted.
- Certified stocks as of Friday, July 29, 2011 were 1,534,713 bags, down about 8500 bags from last Friday. There were 5400 bags pending grading.
- The Commitment of Traders Report (futures only) as of Tuesday, July 26, was released after the close of trading on Friday. Funds were net long 6,781 contracts, down from 8,797 contracts last week. Specs were net long 436 contracts, down from 1,454 contracts the prior week. Commercial accounts were net short 7,217 contracts, down from 10,251 the prior week. Open interest was 107,293 contracts, down from 108,597 contracts the prior week.
Outlook
The U.S. debt situation remains unresolved at this moment in time. Macro economic fears and a week technical pattern will keep investors nervous without a clear direction until we hear fresh news to lead us one way or another."
What does it all mean?
Translated into English, it means that while there are fewer natural threats (drought, frost, heavy rain, etc) causing coffee prices to rise, the constant high demand for coffee and the unstable economic situations in Europe and the United States will keep prices from moving significantly up or down until investors are more confident in their respective economies. As always, we will provide more information as we receive it.