Coffee Market Report
The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector raise their net long position by 18.59% within the market over the week of trade leading to Tuesday 9th. August 2022: to register a net long position of 16,057 lots, which is the equivalent of 4,558,088 bags. This net long position has most likely been increased further following the period of overall firmer trade that 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 raise their net long position by 82.98% within the market over the week of trade leading to Tuesday 9th. August: to register a new net long position of 11,888 Lots which is the equivalent of 1,981,333 bags. This net long position has most likely been increased further following the period of overall firmer trade that that has since followed.
The analysts Safras & Mercado have reported that Brazil coffee farmers have already sold around 45% of the estimated total production of 61.10 million bags from this current Brazil Coffee crop. The pace of sales at this time across a 5-year average is reported to be around 43% and illustrating that current crop sales are marginally above that of the recorded five-year average. Although internal market trade within Brazil is reported to have been relative lacklustre over the past number of weeks. As internally dynamics along with the inverted market structure has seen producers reticent to fully participate in forward sales in the hope of better prices to come.
Weather conditions within Brazil are forecast to remain conducive and seasonally normal over the coming days, following on from last week’s winter full moon. A modest cool front may lead to marginally cooler temperatures however this is not anticipated to bring with it any concern for the Brazil South-eastern coffee regions.
The Coffee Board of India have released provisional green bean export data for the first seven months of the 2022 calendar year to report that the country exported 3,082,700 bags of coffee. The Coffee Board have likewise reported their production estimate for the present October 2021 to September 2022 coffee crop to reach similar levels to the previous year at a total of 5.7 million bags. This figure in line with earlier reports from independent forecasters.
In this respect the Coffee Board foresee that the new robusta coffee crop shall be 2.92% bags higher than the October 2019 to September 2020 robusta coffee crop at a total of 4.11 million bags, while they likewise foresee that the new arabica coffee crop shall be 8.97% bags higher than the October 2019 to September 2020 arabica coffee crop at a total of 1.58 million bags. The new monsoon season over the main coffee districts is underway and traditionally runs from June through to September, bringing with it good rains.
The September 2022 to September 2022 contract arbitrage between the London and New York markets widened on Friday to register this at 124.45 usc/Lb. This equates to 54.92% 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 remain unchanged on Friday, to register these stocks at 571,905 bags, with 90.20% of these certified stocks being held in Europe at a total of 515,832 bags and the remaining 9.80% being held in the USA at a total 56,073 Of this, a total 130,027 bags, or 22.74% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 62.46% of these certified coffees, originating from Honduras. There was meanwhile a 39,240 bags increase to the number of bags pending grading to the exchange; to register 233,402 bags pending grading on the day.
It was an overall firmer day on the commodity markets on Friday, after newly released US CPI data for the month of July filtered through the market, curbing expectations of further aggressive interest rate hikes to come. The Coffee, Sugar, Corn, Soybean, Gold, Silver and Platinum markets ended the day on a positive note, while the Cocoa, Wheat and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.211 Sterling, at 1.025 the Euro and with the US Dollar buying 5.071 Brazil Real.
The New York market started the day on Friday trading on a near to par softer note, while the London market started the day trading on a firmer note. Both the New York and London markets were seen to take a firmer stance into the late morning session, gaining momentum before encountering resistance late in the morning. As the afternoon progressed the markets briefly dropped back from the mid-morning highs, however this was short lived, as the activity built in New York and a firmer trend was taken. The markets buoyed by some degree of buying support ticked higher. This saw the New York market settle on a firmer note with most of the gains of the day intact, while the London market followed suit to likewise settle on a firmer note at the close.
The London market ended the day on a positive note with 90% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 70.67% of the earlier gains of the day intact. This follow through firmer close for the markets, sees the New York market set a new one month high and might indicate direction, with first notice day on the prompt month in New York approaching on the 23rd of August, one might possibly think that the markets are set for a follow through steady start to early trade today, against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
SEP 2252 + 36 SEP 226.60 + 2.65
NOV 2261 + 38 DEC 224.40 + 2.85
JAN 2228 + 41 MAR 217.55 + 2.40
MAR 2195 + 41 MAY 214.75 + 2.25
MAY 2184 + 40 JUL 212.65 + 2.30
JUL 2172 + 40 SEP 211.00 + 2.10
SEP 2164 + 40 DEC 209.50 + 1.90
NOV 2153 + 40 MAR 207.90 + 1.75
