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 17.39% within the market over the week of trade leading to Tuesday 16th. August 2022: to register a net long position of 18,849 lots, which is the equivalent of 5,343,608 bags. This net long position has most likely been decreased marginally following the period of overall softer 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 117.66% within the market over the week of trade leading to Tuesday 16th. August: to register a new net long position of 25,875 Lots which is the equivalent of 4,312,500 bags. This net long position has most likely been little changed following the period of mixed but overall sideways trade that that has since followed.

The November 2022 to December 2022 contract arbitrage between the London and New York markets narrowed on Friday to register this at 112.38 usc/Lb. This equates to 52.67% 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 increase by 13,905 bags on Friday, to register these stocks at 610,680 bags, with 93.05% of these certified stocks being held in Europe at a total of 568,252 bags and the remaining 6.95 % being held in the USA at a total 42,428 Of this, a total 176,540 bags, or 28.91% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 57.55% of these certified coffees, originating from Honduras. There were meanwhile 18,045 bags increase to the number of bags pending grading to the exchange; to register 228,486 bags pending grading on the day.

It was a mixed but overall softer day on the commodity markets on Friday, with the US Dollar strengthening against a basket of other currencies. A stronger Dollar is seen to be a bearish factor for many commodities traded on other currencies. The Coffee, Sugar, Corn and Wheat markets ended the day on a positive note, the Cocoa market remained unchanged on the day, while the Cocoa, Soybean, Gold, Silver, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.182 Sterling, at 1.004 the Euro and with the US Dollar buying 5.170 Brazil Real.

The New York market started the day Friday trading on a modest near to par softer note, while the London market started the day trading on a firmer note. Both the New York and London markets gained support early to see the markets track firmer into the mid-morning session before hitting a ceiling for the day. This saw the markets drop back from the early highs and trend back towards par for the day. As the afternoon progressed the New York and London markets briefly traded to the south of par however this was short lived, and the markets soon recovered to trend firmer towards the close and settle on modest firmer notes respectively, ahead of first notice day on the prompt month approaching tomorrow, which may continue to provide volatility to the futures markets.

The London market ended the day on a positive note with 33.33% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 52.63% of the earlier gains of the day intact. This firmer close for the markets might inspire some degree of follow through confidence, and with first notice day approaching on the prompt month in New York tomorrow, the 23rd August 2022 one might think that the markets are set for a hesitant start to early trade today, against the prices set on Friday, as follows:

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

SEP 2226 + 11                   SEP 215.95 + 1.25
NOV 2226 + 8                     DEC 213.35 + 1.50
JAN 2206 + 6             MAR 209.10 + 1.45
MAR 2178 + 6              MAY 206.55 + 1.50
MAY 2172 + 7                            JUL 204.45 + 1.35
JUL 2165 + 8                                          SEP 202.95 + 1.30
SEP 2157 + 8                                          DEC 201.55 + 1.15
NOV 2149 + 24                                      MAR 199.95 + 1.00