The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increase their net long position by 59.33% within the market over the week of trade leading to Tuesday 17th. May 2022: to register a net long position of 21,305 lots, which is the equivalent of 6,039,873 bags. This net long position has most likely been little changed following the period of mixed but overall sideways softer trade has since followed.

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this raise their net long position by 4.95% within the market over the week of trade leading up to Tuesday 17th. May 2022: to register a new net long position of 16,955 Lots which is the equivalent of 2,825,833 bags.  This net long position has most likely been little changed following the period of mixed but firmer sideways trade that has since followed.

In the latest round of independent forecast updates, Rabobank has come forth to maintain their earlier forecast for the upcoming Brazil 2022/2023 coffee crop, to be 64.50 million bags, compromising of 41.40 million bags of Arabica Coffee and 23.10 million bags of Conilon Robusta Coffee.

Weather conditions within Brazil continue to be monitored and the forecasts for the week ahead across the main arabica growing districts of Southeast Brazil, are mostly in line with historical averages for the seasonal winter temperatures.

The respected U.S. Department of Agriculture Global Agricultural Network USDA have reported their forecast for the production from the predominantly Robusta coffee producing nation of Indonesia for the current April 2022 to March 2023 coffee marketing year, which is currently in harvest, to reach an overall 11,350,000 bags, or 7.28% higher than the previous coffee marketing year in April 2021 to March 2022, with production that is reported at 10,580,000 bags. The production figures for the April 2022 to March 2023 coffee year are forecast to be made up of 10,000,000 bags Robusta coffee and 1,350,000 bags Arabica Coffee.

Of this new crop, the forecast is that Indonesia will export 2.86% or 181,000 bags more than the previous marketing year at a total of 6,500,000 bags of green coffee. This number is slightly more than the 6,319,000 bags of green coffee exported by Indonesia during the April 2021 to March 2022 Coffee marketing year.

The Indonesian domestic coffee consumption has meanwhile, grown exponentially over recent years, reporting high single digit increases in consumption year on year, with the exception of the April 2020 to March 2021 coffee year which the USDA has reported at a 9.18% decline in year-on-year coffee consumption, due to the effect of the Covid-19 related societal lockdowns, which had a significant impact upon the demand for coffee. Domestic coffee consumption staged a recovery during the April 2021 to March 2022 coffee year whereby it was reported by the USDA to have 6.74% increase year on year, this supported by the development of local roasting and value add industries, absorbing a percentage of local coffee production as well as assisted by permitted imports of other origin coffees. Domestic consumption in Indonesia is made up of a combination of local and imported soluble products as well as local and imported roast and ground coffee products and is forecast by the USDA to be in the region of 4,800,000 bags during the current 2022/2023 coffee marketing year, 1.05% higher than the same period last year.

The July 2022 to July 2022 contract arbitrage between the London and New York markets narrowed on Friday to register this at 122.59 usc/Lb. This equates to 56.79% price discount for the London Robusta coffee market. This wide arbitrage may be viewed by price sensitive roasters as an attractive alternative discount for robusta against the comparatively higher value arabica coffee.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,348 bags on Friday, to register these stocks at 1,104,948 bags, with 95.79% of these certified stocks being held in Europe at a total of 1,058,414 bags and the remaining 4.21% being held in the USA at a total 46,534. Of this, a total 569,518 bags, or 51.54% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.02% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 5,200 bags pending grading on the day.

It was a softer day overall on the commodity markets on Friday, with the leading in influence oil markets trending lower on the day as concerns over global economic growth continue to weigh on the markets. The Sugar, Soybean and Gold markets ended the day on a positive note, while the Cocoa, Coffee, Corn, Wheat, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.254 Sterling, at 1.059 the Euro and with the US Dollar buying 4.879 Brazil Real.

The New York and London markets started the day on Friday trading on a firmer note, both markets were quickly supported by some degree of follow through buying support to see the markets trend in a firmer direction early in the day. This saw both the New York and London markets hit a ceiling, to limit the gains for the day during the early morning session. The markets dropped back from these early morning highs to trend in a softer direction, weighed by selling for the remainder of the day’s session. As the afternoon progressed both the London and the New York markets would continue to be driven lower by some degree of long liquidation pressure which saw the markets hit a floor late in the day. The New York and the London markets would soon rebound from these lows to see the New York market settle on a softer note at the close, while the London market followed suit to also settle on a negative note at the close.

The London market ended the day on a negative note with 77.42% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 64.77% of the earlier losses of the day intact. This softer close does little to inspire confidence nor does it indicate direction albeit that the markets recovered some of the earlier losses of the day., to possibly set the markets for a hesitant start to early trade today, against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                NEW YORK USC/LB.

JUL 2056 – 24                                            JUL 215.85 – 2.85
SEP 2059 – 22                                            SEP 216.00 – 2.80
NOV 2055 – 20                                          DEC 215.75 – 2.70
JAN 2050 – 19                                           MAR 215.00 – 2.50
MAR 2045 – 19                                         MAY 213.75 – 2.55
MAY 2041 – 19                                         JUL 212.10 – 2.55
JUL 2039 – 19                                           SEP 210.05 – 2.55
SEP 2035 – 19                                           DEC 207.90 – 2.60