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 raise their net long position within this market by 7.98% over the week of trade leading up to Tuesday 17th. August; to register a new net long position 36,141 lots. Meanwhile the longer term in nature Index Fund sector of this market cut their net long position within the market by 3.47%, to register a net long position of 62,036 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market raise their net long position within the market by 5.33% to register a new net long position 30,495 lots, which is the equivalent of 8,645,197 bags. This net long position has most likely been little changed following the period of mixed but overall, marginally firmer trade that has since followed.

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this market cut their net long position by 7.56% within the market over the week of trade leading up to Tuesday 17th. August: to register a new net long position of 19,702 Lots which is the equivalent of 3,283,667 bags. This net long position has most likely been little changed following the period of mixed but overall, marginally firmer trade that has since followed.

The news from Vietnam, the leading robusta coffee producer and exporter to consumer markets, surrounds the challenges that are continuing in the severely constrained shipment availability from the region, scarcity of containers, escalating demand and correlating freight rates, that is showing no signs of abating before the end of the year. The additional resumption of Covid19 related hard lock down in this country, is not assisting the already existing congestion that prevails, the movement of people and related documentation that exports require, completely restricted. This, while the situation in Indonesia which should now be in full robusta coffee export season swing for new crop to consumer markets, is likewise experiencing similar container, shipment availability and freight rate constraints.

The November-to-December contract arbitrage between the London and New York markets registered at 96.35 usc/Lb. This equates to 51.86% 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 be steady yesterday, to register these stocks at 2,154,886 bags, with 94.09% of these certified stocks being held in Europe at a total of 2,027,527 bags and the remaining 5.91% being held in the USA at a total 127,359 bags. Of this, a total 1,1437,915 bags, or 53.08% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.34% of these certified coffees, originating from Honduras. There was meanwhile a steady number of bags pending grading to the certified warehouses of the exchange; to register these pending grading stocks at 24,558 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 24,167 bags over the week of trade leading up to Monday 23rd. August, to see these stocks registered at 2,331,333 bags, on the day.

It was a firmer day on the commodity markets yesterday, the US markets anticipating further economic policy guidance from the US Federal Reserve towards the end of this week, while the US Dollar lost ground against a basket of other currencies. The Oil markets set the pace yesterday and upward momentum during the session, to set a positive close for Cocoa, Coffee, Soybean, Wheat, Gold, Silver and Palladium, a flatter day for Corn and softer close on Platinum. The day starts with the U.S. Dollar trading at 1.3717 to Sterling, at 1.173 to the Euro and the US Dollar buying 5.246 Brazil Real.

The New York and London markets started the day yesterday trading on a modest firmer note, the markets continued to trade around par for the remainder of the morning session. As the afternoon progressed the markets trended more positively, with London robusta performance influenced by some degree of catch up within the context of the arbitrage, as well as the tightness of export supply in relation to the logistical challenges that continue from main robusta origins, to gain a degree of buying support which saw the markets grand firmer. Both the London and the New York markets were seen to rally towards the late afternoon session which saw the markets settle on a firmer note at the close.

The London market ended the day on a positive note and with 92.18% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 80.41% of the gains of the day intact. This firmer close might inspire some degree of confidence and indicate direction to possibly set the markets 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.

SEP 1964 + 71                                                      SEP 183.30 + 3.35
NOV 1971 + 59                                                    DEC 185.75 + 3.90
JAN 1930 + 29                                                     MAR 188.40 + 3.80
MAR 1896 + 10                                                   MAY 189.35 + 3.65
MAY 1878 + 1                                                     JUL 189.95 + 3.50
JUL 1866 – 7                                                       SEP 190.40 + 3.35
SEP 1863 – 8                                                        DEC 191.05 + 3.20
NOV 1869 – 8                                                      MAR 191.60 + 3.10