Coffee Market Report

The May 2022 to May 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 133.27 usc/Lb. This equates to 58.12% 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 8,000 bags yesterday, to register these stocks at 1,009,144 bags, with 94.39% of these certified stocks being held in Europe at a total of 952,555 bags and the remaining 5.61% being held in the USA at a total 56,589. Of this, a total 437,781 bags, or 43.38% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 46.81% of these certified coffees, originating from Honduras. There was meanwhile 12,480 bags increase to the number of bags pending grading to the exchange; to register 136,308 bags pending grading on the day.

It was a softer day on the commodity markets yesterday, as the greater commodity basket was seen to consolidate somewhat from the 4-day rally spurred by concerns over rising global energy and inflationary pressures as fallout from the conflict between Russia and the Ukraine. The Cocoa, London Robusta Coffee and Soybean markets ended the day on a firmer note, while the Oil, Sugar, New York Arabica Coffee, Wheat, Corn, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.317 Sterling, at 1.105 the Euro and with the US Dollar buying 5.012 Brazil Real.

The New York market started the day yesterday trading on a modest softer note, while the London market started the day trading on 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 morning session. 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 recover hit a floor for the day, this saw the market rebound briefly and trend back towards par. The support was short lived, and the market trended softer during the late session to see the New York market settle on a negative note at the close. The London market recovered all of the earlier losses to see the market turn firmer and settle near to the modest highs of the day at the close.

The London market ended the day on a firm note with 88.46% of the earlier gains of the day intact, while the New York market ended the day on a negative note with 68.57% 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 earlier 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 yesterday, as follows:

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

MAY 2117 + 23                                          MAY 229.30 – 3.60
JUL 2096 + 25                                            JUL 228.25 – 3.45
SEP 2093 + 24                                            SEP 226.70 – 3.40
NOV 2090 + 22                                          DEC 224.15 – 3.50
JAN 2086 + 20                                           MAR 221.45 – 3.65
MAR 2083 + 16                                         MAY 219.50 – 3.70
MAY 2086 + 14                                         JUL 217.00 – 3.70
JUL 2087 + 11                                           SEP 214.05 – 3.75