Coffee Market Report

The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market increase their net long position within this market by 94.67% over the week of trade leading up to Tuesday 27th April; to register a new net long position of 35,603 lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 5.47%, to register a net long position of 78,159 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market raised their net long position within the market by 89.29% to register a new net long position 33,565 Lots, which is the equivalent, which is the equivalent of 9,515,529 bags. This net long position has most likely been trimmed, following the period of overall mixed but softer trade that has since followed.

The National Coffee Institute of Honduras (IHCAFE) have reported preliminary data shows that the country’s coffee exports for the month of April were 16.5% higher than the same month last year, at a total of 765,084 bags. The report also states that coffee exports for the first seven months of the current October 2020 to September 2021 coffee year are 14% lower than the same period in the previous year, at a total of 3,116,682 bags.

The National Coffee Institute of Honduras (IHCAFE) have revised their original estimate for the current October 2020 to September 2021 coffee crop to be 11% lower, to now total 5.61 million bags, due to a drop in production following on from back-to-back hurricanes Eta and Iota.

Weather conditions in Brazil have been reported to mostly normal with temperatures remaining mild within most of the coffee growing districts, small pockets of rain are expected for the south and central regions during the next seven days.

The London market was closed for the Early May Bank Holiday in the UK yesterday, to leave the New York market trading solo for a shortened day’s trade.

The July-to-July contract arbitrage between the London and New York markets narrowed yesterday; to register this at 74.21 usc/Lb. This equates to 52.91% price discount for the London Robusta coffee market. This wide arbitrage will likely 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 increase by 8,320 bags yesterday, to register these stocks at 1,945,005 bags, with 95.22% of these certified stocks being held in Europe at a total of 1,852,122 bags and the remaining 4.78% being held in the USA at a total 92,883 bags. Of this, a total 996,600 bags, or 51.24% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.08% of these certified coffees, originating from Honduras. There was meanwhile a smaller in number 8,000 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 95,396 bags.

It was a mixed day on the commodity markets yesterday, with the US Dollar slipping back marginally. The Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the Sugar, Cocoa, Coffee, Soybean and Wheat markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.387 Sterling, at 1.204 the Euro and with the US Dollar buying 5.440 Brazil Real.

The New York market trading solo for a shortened days trade, started the day yesterday trading marginally to the north of par, the market would oscillate around par for the remainder of the morning session. As the afternoon progressed the New York market started to gain a degree of momentum before hitting a ceiling limting the gains for the day. The New York market dropped back from the highs of the day to trend softer for the afternoon session, this saw the market settle on a softer note for the day.

The London market returns to the field of play today, following a modest close to par positive close on Friday with 14% of the earlier gains the day intact, while the New York market ended the day yesterday on a negative note and with 64.86% of the earlier losses of the day intact. This softer close for the New York market does little to indicate direction nor does it inspire confidence and one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set in London on Friday and New York yesterday, as follows:

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

JUL 1456 + 4                                                           JUL 140.25 – 1.20
SEP 1479 + 4                                                           SEP 142.15 – 1.25
NOV 1497 + 5                                                         DEC 144.60 – 1.15
JAN 1510 + 3                                                          MAR 146.60 – 1.15
MAR 1524 + 4                                                        MAY 147.40 – 1.05
MAY 1540 + 4                                                        JUL 147.75 – 1.05
JUL 1556 + 4                                                          SEP 147.90 – 1.05
SEP 1570 + 4                                                          DEC 148.10 – 1.05