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 decreased their net long position within this market by 7.01% over the week of trade leading up to Tuesday 4th. October; to register a new net long position at 35,275 Lots. Meanwhile the longer term in nature Index Fund sector of this market cut their net long position by 2.96% within the market, to register a new net long position of 42,424 Lots on the day.

Over the same week, the Non-Commercial Speculative sector cut their net long position by 9.05% within the market over the week of trade leading up to Tuesday 4th. October: to register a net long position of 24,327 lots, which is the equivalent of 6,896,597 bags. This net long position has most likely been little changed following the period of mixed but overall softer sideways trade that has since followed.

The November 2022 to December 2022 contract arbitrage between the London and New York narrowed yesterday to register this at 119.56 usc/Lb. This equates to 54.98% 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 yesterday, to register these stocks at 416,719 bags, with 86.98% of these certified stocks being held in Europe at a total of 362,462 bags and the remaining 13.02% being held in the USA at a total 54,257. Of this, a total 259,356 bags, or 62.24% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 30.23% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 4,076 bags pending grading on the day.

It was a mixed day on the commodity markets yesterday, with the US Dollar gaining further ground against a basket of other currencies to set a new high for the month of October. The London Robusta Coffee, Sugar, Corn, Soybean, Wheat and Palladium markets ended the day on a positive note, while the New York Arabica Coffee, Cocoa, Gold, Silver and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.103 Sterling, at 0.968 the Euro and with the US Dollar buying 5.189 Brazil Real.

The New York and London markets started the day yesterday trading on a very soft note. Both markets quickly recovered to trade around par for the remainder of the early morning session. The late morning session saw the New York market gain momentum to trend in a firmer direction, while the London market followed suit albeit in a more sedate manner. As the afternoon progressed, both the New York and the London markets attracted a degree of selling pressure to see the markets dip into negative territory. The New York market was seen to be weighed by long liquidation selling before staging a recovery late in the day to see the market settle on a modest softer note at the close, while the London market rallied late in the day to settle on a modest firmer note at the close.

The London market ended the day on a near to unchanged positive note with 50% of the earlier gains of the day intact, while the New York market ended the day on a modest negative note with 23.64% of the earlier losses of the day intact. This mixed but overall modest softer close for the markets, does little to indicate direction albeit that the New York market recovered most of the earlier losses to settle near to unchanged for 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 yesterday, as follows:

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

NOV   2158 + 3                                     DEC    217.45 – 0.65
JAN    2154 Unch                                  MAR   207.65 – 0.60
MAR  2133 Unch                                  MAY   203.45 – 0.40
MAY  2118 Unch                                  JUL     200.80 – 0.30
JUL    2110 Unch                                  SEP       198.90 – 0.30
SEP    2103 – 1                                      DEC     198.10 – 0.20
NOV  2088 – 1                                      MAR    197.80 – 0.05
JAN   2080 – 1                                      MAY    197.25 – 0.05