The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund increase their net long position by 125.17% within this market over the week of trade leading up to Tuesday 11th April 2023; to register a new net long position at 21,772 Lots. The longer term in nature Index Fund sector of this market increased their net long position by 1.88% within the market, to register a new net long position of 53,799 Lots on the day.

Over the same week, the Non-Commercial Speculative switch their net short position within the market over the week of trade leading to Tuesday 11th April 2023: to register a new net long position of 10,907 lots, which is the equivalent of 3,092,086 bags. This net long position has most likely been increased further following the period of mixed but overall firmer trade that has followed.

The Green Coffee Association of the U.S.A. have announced that the country’s port warehouse stocks decrease by 88,690 bags or 1.45% during the month of March, to register these stocks at 6,016,272 bags at the end of the month. This compares with 54,950 bags increase reported in the same month last year. Of this total, 25,445 bags were registered in the U.S. Certified coffee stock warehouses at the time of reporting. The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 595,000 bags per week, would conservatively have been 1.80 million bags.

This drawdown in stocks reported at the end of March 2023 marks the fourth consecutive month that there has been a reported decrease in stocks, and while still viewed to be well above the historic low registered by the Green Coffee Association of the U.S.A. in 2011 of 4 million bags, the report reflects this to be lowest point in the U.S Green Coffee Stock levels since May 2022. The U.S Green Coffee stocks reported meanwhile, 5.68 million bags in March 2021 amid the heightened Covid-19 global logistic challenges experienced during that time, as roasters turned to local stocks for inventory support.

The drawdown of GCA coffee stocks through the first quarter of 2023 is likely underpinned by a combination of factors, to include ease of access as well as price point where coffee inventories are already stored in consumer country warehouses. This is likely to have been compounded by the pivot toward more conservative inventory patterns once again, following earlier pandemic related risk mitigation and buying behaviour that would have required excess coffee inventory to be held in consumer markets, in view of international congestion. The current and conservative buying strategies adopted are similarly influenced by a continuation of the inverted structure of the coffee futures markets, that reduces the ability to carry large local inventory, alongside the altered post-pandemic macroeconomic environment, and in mature economies in general terms, the unfamiliar territory of cost of debt that is required to carry excess inventory. This latter, in line with the much-publicised borrowing cost and interest rate increases within in this largest consumer economy. The current levels of GCA reported coffee stocks meanwhile, which include the certified coffee stocks that are held in certified warehouses and registered to the New York exchange, would equate to more than thirteen weeks of roasting activity, which most would consider to be a safe reserve.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,075 bags yesterday, to register these stocks at 709,612 bags, with 96.41% of these certified stocks being held in, Europe at a total of 684,167 bags and the remaining 3.59% being held in the USA at a total 25,445. Of this, a total 314,584 bags, or 44.33% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 52.22% of these certified coffees, originating from Honduras. There was meanwhile a no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.

The July 2023 to July 2023 contract arbitrage between the London and New York markets widened yesterday on Friday to register this at 91.55 usc/Lb. This equates to 45.99% price discount for the London Robusta coffee market.

It was a mixed but overall firmer day on the commodity markets yesterday, the US Dollar gained 0.60% against a basket of other currencies through the session yesterday, as investors await further cues on US Federal Reserve monetary policy direction. The Coffee, Cocoa, Sugar, Corn, Soybean and Wheat, Platinum and Palladium markets ended the day on a positive note, while the Gold and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.238 Sterling, at 1.093 the Euro and with the US Dollar buying 4.941 Brazil Real.

The New York and London markets started the day yesterday trading to the north of par on firmer notes respectively. During the early morning session, the New York market tracked upward in comparatively light volume, with the London market following suit to likewise set a positive track through the morning. As the afternoon progressed, the New York market buoyed by buy stops, spread activity, with speculative buyers active and a lack of volume selling pressure, assisted a continuation of upward momentum which continued to build during the session. The late afternoon session registered fair volume in New York with sellers attracted to the floor 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 93.54% of the earlier gains of the intact, while the New York market ended the day on a likewise positive note with 93.83% of the earlier gains of the day intact. This very firm close for the markets, with both the New York and London markets tracking upward throughout the session to settle near to the highs of the day, might possibly see the markets set for a follow through steady start to early trade today, against the prices set yesterday, as follows:

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

MAY   2440 + 29                                        MAY   201.00 + 7.60
JUL     2370 + 26                                        JUL     199.05 + 7.55
SEP     2335 + 27                                        SEP     196.05 + 7.20
NOV   2301 + 27                                        DEC    193.20 + 7.00
JAN    2276 + 26                                        MAR   192.60 + 6.85
MAR  2254 + 25                                        MAY    192.70 + 6.65
MAY  2248 + 26                                         JUL     192.85 + 6.35
JUL    2248 + 26                                         SEP     193.25 + 5.95