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 raise their net long position within this market by 19.83% over the week of trade leading up to Tuesday 23rd. August; to register a new net long position at 31,899 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.58%, to register a net long position of 42,120 Lots on the day.
Over the same week, the Non-Commercial Speculative sector increased their net long position by 26.16% within the market over the week of trade leading up to Tuesday 23rd. August: to register a net long position of 23,777 lots, which is the equivalent of 6,740,674 bags. This net long position has most likely been increases further following the period of overall firmer trade that that has since followed.
Weather conditions within Brazil have been reported to be relatively cool over the weekend, with modest cooler temperatures forecast to continue throughout the remainder of the week. Scattered showers are anticipated for the southern regions of the Brazil coffee growing belt towards the end of this week. This leading to temperatures in the mid to low teens and is not anticipated to bring with it bring with it any weather concern.
The November 2022 to December 2022 contract arbitrage between the London and New York narrowed yesterday to register this at 133.23 usc/Lb. This equates to 56.31% 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 5,017 bags yesterday, to register these stocks at 663,874 bags, with 94.78% of these certified stocks being held in Europe at a total of 629,241 bags and the remaining 5.22% being held in the USA at a total 34,633 Of this, a total 285,352 bags, or 42.98% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.15% of these certified coffees, originating from Honduras. There were meanwhile 21,629 bags decrease to the number of bags pending grading to the exchange; to register 111,062 bags pending grading on the day.
It was a mixed but overall softer day on the commodity markets yesterday, as the US Dollar index reached a 20 year high on the back of news that the US Federal Reserve would continue with their hawkish monetary policy stance. The Corn, Wheat, Platinum and Palladium markets ended the day on a positive note, while the Coffee, Sugar, Cocoa, Soybean, Gold and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.171 Sterling, at 0.999 the Euro and with the US Dollar buying 5.028 Brazil Real.
The New York market trading solo for a shortened day yesterday started the day trading close to par on a modest softer note, the New York market quickly attracted a degree of selling pressure to see the market trend softer throughout the early morning session. The New York market was seen to hit a floor late during the morning session to limit the losses for the day. As the afternoon progressed the market bounced off the lows of the day and recover to a degree some. This saw the market gain support during the late afternoon session before being capped. The market dropped back late in the day to settle on a modest softer note at the close of this short day of trade.
The London market ended the day on Friday on a negative note with 89.79% of the earlier losses of the day intact, while the New York market ended the day yesterday on a likewise negative note with 32.97% of the earlier losses of the day intact. This softer close for the New York market trading solo on the day, does little to inspire confidence and with the market settling near to the lows of the day, one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set on Friday in London and yesterday in New York, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
Close: 26/08/2022 Close: 29/08/2022
NOV 2279 – 33 DEC 236.60 – 1.50
JAN 2260 – 34 MAR 230.45 – 1.20
MAR 2231 – 35 MAY 227.10 – 1.00
MAY 2223 – 35 JUL 224.05 – 0.85
JUL 2215 – 35 SEP 221.40 – 0.85
SEP 2207 – 35 DEC 218.70 – 0.80
NOV 2200 – 35 MAR 216.10 – 0.80
JAN 2197 – 37 MAY 214.30 – 0.95
