Market Reports

According to the latest update from the U.S. Government’s National Weather Service Climate Prediction Centre CPC, the current El Niño conditions will continue to develop and strengthen in the weeks ahead with a 81% chance that the weather event will be one of the strongest on record during the October to December period later this year. This follows an extended period during which sea surface temperatures across the central and eastern equatorial Pacific remained close to long-term averages. Forecast guidance, including projections from the North American Multi-Model Ensemble NMME, indicates that El Niño will prevail through the end of this year and into early 2027.

The coffee industry continues to pay close attention to these developments, due to the impact that this weather event can have on coffee production. Having a look in history, El Niño is typically associated with warmer and drier weather across Southeast Asia, India, Vietnam, and certain coffee-growing areas of Brazil. Conversely, parts of East Africa often experience above-average rainfall, while southern Africa and sections of South America can be exposed to drier-than-normal conditions.

With the Brazil coffee trade dominated by trade houses centred within São Paulo State and with the State taking a regional public holiday yesterday to honour the Constitutional Revolution of 1932, there was only limited coffee news emanating from Brazil yesterday and one might think many will take a bridge day holiday into the weekend to possibly mute sentiment from this largest producer for the day.

The Intercontinental Exchange (ICE) released a notice earlier this week, to increase margin requirements for arabica coffee futures, coinciding with a significant price rally of over 16% on Monday. This is a mechanism that may unusually be actioned when an asset value increases significantly to mitigate trading risk, to reduce market volatility.  The upward trajectory in these markets, where the fundamental landscape has not altered as significantly, can have a negative impact in the liquidation pressure for large short position holders.

The Certified washed arabica coffee stocks held against the New York exchange were seen to decrease by 7,842 bags yesterday, to register these stocks at 346,419 bags, with 71.85% of these certified stocks held in Europe, at a total of 248,896 and the remaining 28.15% being held in the USA at a total 97,523 bags. Of this, a total 10,288 or 2.97% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 30.21% of these certified coffees, from Honduras at 104,670 bags and 17.09% from Peru at a total 59,232 bags. The pending grading remained unchanged on the day, registering 275 bags pending grading, with 100% from Honduras.

The September 2026 to September 2026 contract arbitrage between the London and New York markets widened yesterday, to register this at 164.51 Usc/Lb. This equates to 47.29% price discount for London robusta coffee.

It was a firmer day on the commodity markets yesterday, following minutes from the US Federal Reserve which indicated rising concern around inflation and higher energy prices leading investors to believe interest rate hikes may be on the horizon. The geopolitical reignition of war conditions in the Middle East influencing market uncertainty in the short term.  The Coffee, Cocoa, Sugar, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on a firmer note, while the Corn and Soybean markets ended the day on a softer note. The day starts with the US Dollar trading at 1.343 Sterling, at 1.144 to the Euro and with the US Dollar buying 5.116 Brazil Real.

The New York and London markets opened the day on a positive note, to see the markets continue to trade in firm territory throughout the remainder of the early morning session in limited trade volume to start the day. The New York market fell back off the highs of the morning for a brief period before finding support during the late morning session, to trade firmer. The London market continued to trade in positive territory, making gains throughout the session. As the afternoon progressed, the New York market continued to trend in a firmer direction, where buyers returned to the floor in the absence of sellers, the day tracked quickly higher to trigger buy stops along the way.  This firmer action continued in both the New York and London markets as the day progressed, in a market void of volume on the sell side, to see the market settle on a firm note at the close with most of the earlier gains of the day intact. The London market followed suit to also settle on a firm note at the close, with most of the earlier gains of the day intact.

The London market ended the day on positive note, with 92.92% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 98.32% of the earlier gains of the day intact. The firmer close for the markets, with both the New York and London markets trading in firmer territory to settle near to the highs of the day in a third consecutive heavy volume day.  With the speculative sector at the helm, the markets might be in for a follow through steady start to early trade today, against the prices set yesterday, as follows: