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 64.45% over the week of trade leading up to Tuesday 18th. October; to register a new net long position at 12,072 Lots. Meanwhile the longer term in nature Index Fund sector of this market cut their net long position by 9.92% within the market, to register a new net long position of 36,588 Lots on the day.

Over the same week, the Non-Commercial Speculative sector cut their net long position by 78.61% within the market over the week of trade leading up to Tuesday 18th. October: to register a net long position of 5,106 lots, which is the equivalent of 1,447,528 bags. This net long position has most likely been decreased further following the period of very soft trade that has since followed.

The December 2022 to January 2023 contract arbitrage between the New York and London markets widened yesterday to register this at 101.81 usc/Lb. This equates to 53.47% 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 1,712 bags yesterday, to register these stocks at 388,865 bags, with 86.18% of these certified stocks being held in Europe at a total of 335,142 bags and the remaining 13.82% being held in the USA at a total 53,723. Of this, a total 233,377 bags, or 60.01% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 32.07% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 646 bags pending grading on the day.

It was an overall softer day on the commodity markets yesterday, with the US Dollar strengthening against a basket of other currencies, while the markets await further directional news on the US Federal Reserve’s monetary policy stance. The Cocoa market ended the day on a positive note, while the Coffee, Sugar, Corn, Soybean, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.130 Sterling, at 0.988 the Euro and with the US Dollar buying 5.307 Brazil Real.

The New York and London markets started the day yesterday trading on modest near to par firmer note, both markets dropped back from the open quickly to dip below par. The markets gained support during the mid-morning session to trend in a firmer direction. The late morning session saw the New York and London markets continue to find support, buoyed in a firmer direction before being capped late in the morning, limiting the gains for the day. As the afternoon progressed, both the New York and London markets moved steadily lower from the morning highs and attracted a degree of selling pressure, this saw the markets pressured lower again, by some degree of long liquidation, where the markets set a floor for the day, limiting the losses. Both the New York and the London markets rebounded from the lows of the day, which saw the New York market recover most of the earlier losses to settle on a modest softer note at the close, while the London market continued to trend softer to settle near to the lows of the day at the close.

The London market ended the day on a negative note with 86% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 25% of the earlier losses of the day intact. This follow through softer close for the markets, does little to indicate direction and with both markets settling on a softer note at the close, 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.

JAN   1953 – 43                                        DEC   190.40 – 0.50
MAR 1939 – 41                                        MAR  184.95 – 0.85
MAY 1933 – 38                                        MAY  182.00 – 1.05
JUL   1929 – 37                                        JUL    180.15 – 1.45
SEP   1925 – 36                                        SEP    178.10 – 2.00
NOV 1916 – 35                                        DEC   177.20 – 2.25
JAN   1920 – 36                                       MAR  177.15 – 2.35
MAR 1922 – 36                                       MAY   177.00 – 2.35