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 3.73% over the week of trade leading up to Tuesday 11th. October; to register a new net long position at 33,961 Lots. Meanwhile the longer term in nature Index Fund sector of this market cut their net long position by 4.26% within the market, to register a new net long position of 40,618 Lots on the day.

Over the same week, the Non-Commercial Speculative sector cut their net long position by 1.86% within the market over the week of trade leading up to Tuesday 11th. October: to register a net long position of 23,874 lots, which is the equivalent of 6,768,173 bags. This net long position has most likely been decreased further following the period of softer sideways trade that has since followed.

The Green Coffee Association of the U.S.A. have announced that the country’s port warehouse stocks fell by 71,608 bags or 1.11% during the month of September, to register these stocks at 6,378,478 bags at the end of the month. Of this total, 54,897 bags were registered in the U.S. Certified coffee stock warehouses at the time of reporting. The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 595,000 bags per week, would conservatively have been 1.8 million bags.

The November 2022 to December 2022 contract arbitrage between the London and New York narrowed yesterday to register this at 101.93 usc/Lb. This equates to 52.12% 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 2,440 bags yesterday, to register these stocks at 397,999 bags, with 86.21% of these certified stocks being held in Europe at a total of 343,102 bags and the remaining 13.79% being held in the USA at a total 54,897. Of this, a total 240,986 bags, or 60.55% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 31.65% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 3,436 bags pending grading on the day.

It was a firmer day on the commodity markets yesterday, with the US Dollar index dropping back from recent highs. A weaker US Dollar is seen as a bullish factor for commodities traded in other currencies, however the gains in the greater commodity basket were kept in check by looming interest rate hikes from the USA. The London Robusta Coffee, Wheat, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the New York Arabica Coffee, Cocoa, Sugar and Corn markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.139 Sterling, at 0.986 the Euro and with the US Dollar buying 5.281 Brazil Real.

The New York market started the day yesterday trading on a modest softer note, while the London market opened the day trading firmer. Both markets gained support and momentum early in the day to see the markets trend firmer throughout the morning session. This saw both the New York and the London markets hit a ceiling to limit the gains for the day and drop back from the highs of the morning session. As the afternoon progressed, the New York market dropped below par and was pressured lower by some degree of selling pressure in the market. The London market followed suit to likewise trend lower. Both the New York and London market hit a floor late in the day before finding support to see the markets bounce off the lows and gain momentum during the later afternoon session. This saw the New York market settle on a negative note at the close under comparatively fair volumes of trade within a narrow range, while the London market recovered all of the earlier losses to settle on a modest near to unchanged firmer note at the close.

The London market ended the day on a modest near to unchanged positive note with 21.43% of the earlier gains of the day intact, while the New York market ended the day on a negative note with 43.40% of the earlier losses of the day intact. This mixed but overall softer close for the markets, does little to inspire confidence albeit that the New York market recovered most of the earlier losses of the day, to trend in a firmer direction towards the close, which may possibly see the markets set for a hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

NOV    2064 + 3                                    DEC   195.55 – 1.15
JAN     2045 – 6                                    MAR   191.35 – 1.65
MAR   2022 – 10                                  MAY   189.00 – 1.95
MAY   2010 – 9                                     JUL    187.30 – 1.95
JUL     2006 – 8                                     SEP       185.80 – 1.95
SEP     2002 – 8                                     DEC      185.15 – 2.00
NOV   1987 – 10                                   MAR     185.20 – 1.95
JAN    1984 – 8                                     MAY      185.30 – 1.75