Cyclone Freddy has moved over Madagascar earlier this week, bringing heavy rains and high winds. The storm, with widespread flooding causing damage to infrastructure on the island. Following the weather system’s path, Freddy has passed over Madagascar and has since been downgraded to a tropical storm, with the forecast direction moving towards the Southern East African coastline, where it is expected to make landfall along the Mozambique coastline towards the end of this week. The weather system is anticipated to bring with it, heavy rainfall for the region, although the strength of the storm and the wind that may come along with the rain are being carefully watched by all sectors. These adverse weather conditions in areas of already limited infrastructure can cause excessive damage and the hope is that the strength of the storm will continue to wane ahead of reaching the mainland of Mozambique, with a trajectory of moving further inland toward eastern Zimbabwe and north-eastern South Africa.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 17,106 bags yesterday, to register these stocks at 814,966 bags, with 95.10% of these certified stocks being held in, Europe at a total of 775,044 bags and the remaining 4.90% being held in the USA at a total 39,922. Of this, a total 416,098 bags, or 51.06% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 45.72% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register no pending grading on the day.

The May 2023 to May 2023 contract arbitrage between the London and New York markets widened yesterday to register this at 93.35 usc/Lb. This equates to 48.28% 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.

It was a softer day overall on the commodity markets yesterday, while the US Dollar gained ground against a basket of other currencies yesterday. The Coffee and Platinum markets ended the day on a positive note, while the Cocoa, Corn, Sugar, Soybean, Wheat, Gold, Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.206 Sterling, at 1.062 the Euro and with the US Dollar buying 5.152 Brazil Real.

The New York and London markets started the day yesterday trading on a mildly firmer note. During the early morning session, the New York market gained upward momentum, with the London market following suit to likewise set a positive track through the morning. As the afternoon progressed, the New York buoyed by buy stops, with speculative buyers active, upward momentum continued to build. The mid-afternoon session saw the markets plateau trading in positive territory, following earlier gains. The late afternoon session with fair volumes trading in New York attracted a degree of selling activity to cap the gains for the day. The New York market maintained most of the earlier gains, to settle on a firmer note at the close, the London market followed suit to also settle on a positive note at the close.

The London market ended the day on a positive note with 96% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 81.40% of the earlier gains of the day intact. This follow through very firm close for the markets, with both the New York and London markets gaining momentum throughout the session to settle near to the highs of the day, might inspire some degree of momentum to possibly see the markets due for a follow through steady start to early trade today, as follows:

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

MAY   2205 + 72                                     MAY   193.35 + 3.50
JUL     2188 + 69                                     JUL     191.70 + 3.55
SEP     2162 + 66                                    SEP      189.50 + 3.70
NOV   2128 + 63                                    DEC     187.40 + 3.70
JAN    2106 + 59                                    MAR    187.05 + 3.60
MAR  2100 + 55                                    MAY    187.55 + 3.45
MAY  2101 + 53                                    JUL      187.70 + 3.40
JUL    2107 + 53                                    SEP      187.80 + 3.35