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 50.55% over the week of trade leading up to Tuesday 17th. May; to register a new net long position 29,054 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 5.24%, to register a net long position of 40,500 Lots on the day.

Over the same week, the Non-Commercial Speculative sector increased their net long position by 59.33% within the market over the week of trade leading up to Tuesday 17th. May: to register a net long position of 21,305 lots, which is the equivalent of 6,039,873 bags. This net long position has most likely been little changed following the period of mixed but overall sideways softer trade has since followed.

The respected United States Department of Agriculture Foreign Agriculture Service (USDA) have reported that due to favourable weather conditions and a coffee rotation and pruning program that has seen old robusta trees taken out of production and replanted, now coming into fruition that coffee production in Uganda for the coming October 2022 to September 2023 coffee year shall be 400,000 bags or 6.40% larger than the current October 2021 to September 2022 coffee year, at a total of 6,650,000 bags. This crop is expected to be made up of 5,750,000 bags of Robusta Coffee and 900,000 bags of arabica Coffee. Of this new crop, the forecast is that Uganda will export 6.53% or 400,000 bags more than the previous marketing year at a total of 6,520,000 bags of green coffee.

The July 2022 to July 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 123.27 usc/Lb. This equates to 57.11% price discount for the London Robusta coffee market. This wide arbitrage may 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 decrease by 3,275 bags yesterday, to register these stocks at 1,101,673 bags, with 95.78% of these certified stocks being held in Europe at a total of 1,055,139 bags and the remaining 4.22% being held in the USA at a total 46,534. Of this, a total 566,918 bags, or 51.46% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.09% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 5,200 bags pending grading on the day.

It was a mixed but overall softer day on the commodity markets, with the US Dollar losing ground to a basket of other commodities which is seen to be a bearish factor for many of the US Dollar based commodity markets when trading in other currencies. The Cocoa, Corn, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the Sugar, Coffee and Soybean markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.257 Sterling, at 1.066 the Euro and with the US Dollar buying 4.815 Brazil Real.

The New York market started the day yesterday trading on a firmer note, while the London market started the day yesterday trading on a softer note. The markets would oscillate around par for the remainder of the morning session trading either side of par in a limited volume. As the afternoon progressed the markets would be seen to take a softer track, pressured by some degree of selling, this saw both the New York and the London markets drop back from the earlier highs of the day and trend in a softer direction. The markets hit a floor during the late afternoon session to limit the losses for the day, this saw both the New York and London markets rebound from the lows of the day. The New York market recovered all of the losses of the day to settle on a very modest near to unchanged softer note, while the London market settle on a likewise softer note at the close.

The London market ended the day on a negative note with 68.18% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 9.09% of the earlier losses of the day intact. The follow through softer close for the markets does little to inspire confidence, albeit that the New York market recovered all of the earlier losses of the day, which may indicate come degree of consolidation to possibly set the markets for a follow through hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

JUL 2041 – 15                                            JUL 215.85 – 0.10
SEP 2043 – 16                                            SEP 216.00 – 0.05
NOV 2037 – 18                                          DEC 215.75 – 0.05
JAN 2031 – 19                                           MAR 215.00 – 0.05
MAR 2026 – 19                                         MAY 213.75 Unch
MAY 2021 – 20                                         JUL 212.10 – 0.05
JUL 2019 – 20                                           SEP 210.05 – 0.15
SEP 2015 – 20                                            DEC 207.90 – 0.20