Coffee Market Report
The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increased their net long position by 9.21% within the market over the week of trade leading up to Tuesday 8th. February 2022: to register a net long position of 50,918 lots, which is the equivalent of 14,435,027 bags. This net long position has most likely been increased further following the period of mixed but overall, firmer sideways 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 increase their net long position by 0.30% within the market over the week of trade leading up to Tuesday 8th. February 2022: to register a new net long position of 30,981 Lots which is the equivalent of 5,163,500 bags. This net long position has most likely been increased further following the period of mixed but overall firmer trade that has since followed.
The analysts Safras & Mercado have reported that Brazil coffee farmers have sold around 32% of the estimated total production of 63 million bags from the July 2022 to June 2023 Brazil Coffee crop. With an estimated 37% of arabica production already sold, against 28% in the same period last year and 19% of Conilon Robusta sales outpacing the 9% recorded at the same time in 2021. The report indicates that there remains a reticence on the part of producers to participate fully in forward sales activity, due to high marginal costs, together with the prevailing volatility in the higher value seen in the New York Coffee futures market.
The March 2022 to March 2022 contract arbitrage between the London and New York markets narrowed on Friday to register this 148.05 usc/Lb. This equates to 58.83% 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 remain unchanged on Friday, to register these stocks at 1,035,410 bags, with 94.35% of these certified stocks being held in Europe at a total of 976,871 bags and the remaining 5.65% being held in the USA at a total 58,539. Of this, a total 369,968 bags, or 35.73% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 54.35% of these certified coffees, originating from Honduras. There was meanwhile no change to number of bags pending grading to the exchange; to register 40,337 bags pending grading on the day.
It was a firmer day on the commodity on Friday, with the leading in influence Oil markets trending firmer as inflation worries continue to spur the commodity basket. The London Robusta Coffee, Corn, Soybean, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on a firmer note, while the Sugar, Cocoa and New York Arabica Coffee markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.354 Sterling, at 1.134 the Euro and with the US Dollar buying 5.253 Brazil Real.
The New York and London markets started the day on Friday trading on a firmer note. Both markets were buoyed by buying support early in the day to trend firmer during the morning session. During the Mid-morning session, the markets encountered resistance to drop back from the early highs of the day and be seen to be set on a softer path for the remainder of day. As the afternoon progressed the New York market attracted a degree of long liquidation pressure to see the market trend softer for the remainder of the afternoon session. The London market followed suit, in a more sedate manner.
The late afternoon session saw New York market continue on a softer path and hit a floor late in the day, thus limiting the losses to see the market settle on a negative note at the close, while the London market bounced off the lows of the day to recover all of the losses and settle on a modest near to unchanged firmer note at the close.
The London market ended the day on a modest near to unchanged positive note with 21.74% of the earlier gains of the day intact, while the New York market ended the day on negative note with 81.61% of the earlier losses of the day intact. This mixed but mostly softer close, does little to indicate direction, with the New York market retaining most of the losses of the day, one might think that the markets are due for little better than a hesitant steady start to early trade today, against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAR 2284 + 5 MAR 251.65 – 3.55
MAY 2270 + 7 MAY 251.05 – 3.20
JUL 2249 + 9 JUL 250.55 – 3.05
SEP 2241 + 8 SEP 248.85 – 3.10
NOV 2236 + 5 DEC 245.95 – 3.05
JAN 2235 + 5 MAR 242.90 – 3.20
MAR 2233 + 5 MAY 240.20 – 3.20
MAY 2229 + 5 JUL 236.90 – 3.10
