Coffee Market Report

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector increase their net short position by 17.39% within the market over the week of trade leading to Tuesday 8th. November 2022: to register a new net short sold position of 23,516 Lots which is the equivalent of 3,919,333 bags. This net short position has most likely been little changed following the period of mixed but overall softer trade that has since followed.

The latest Commitment of Traders report from the New York Arabica market will be released later today.

Tomorrow is the Proclamação da República (Republic Day) holiday in Brazil, which shall likely encourage many within the country to take a bridge day holiday today and an extended long weekend. This shall most likely keep most internal market players out of the field of play for the next two days.

The December 2022 to January 2023 contract arbitrage between the New York and London markets narrowed on Friday to register this at 86.82 usc/Lb. This equates to 51.04% 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 5,352 bags on Friday, to register these stocks at 454,056 bags, with 88.37% of these certified stocks being held in Europe at a total of 401,098 bags and the remaining 11.63% being held in the USA at a total 52,958. Of this, a total 286,126 bags, or 63.02% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 31.15% of these certified coffees, originating from Honduras. There was meanwhile a 93,029 bags increase to the number of bags pending grading to the exchange; to register 456,133 bags pending grading on the day.

It was a mixed but overall firmer on the commodity markets on Friday, with US Consumer prices rising less than expected during October and data showing annual inflation below the 8% mark for the first time in the past eight months, perhaps signalling a move away from strict monetary policies to come. The London Robusta Coffee, Sugar, Corn, Soybean, Wheat, Gold and Palladium markets ended the day on a positive note. The New York Arabica Coffee, Cocoa, Silver and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.176 Sterling, at 1.031 the Euro and with the US Dollar buying 5.325 Brazil Real.

The New York and London markets started the day yesterday trading on a modest firmer note. Both the New York and the London markets quickly attracted a degree of buying support early in the day to see both markets trend firmer. The late morning session saw the markets continue to project on a firmer path, supported by buoyancy to the upside. As the afternoon progressed, the markets were seen to hit a ceiling, limiting the gains for morning session. The New York market dropped back from the highs of the midday session, as the activity in New York increased, to be pressured lower by some degree of liquidation. This saw the market slip back below par into negative territory late in the day’s session. The New York market settled on a modest negative note at the close. The London market followed suit to likewise drop back from the midday highs, although to retain some of the earlier gains and see the market settle on a modest firmer note at the close.

The London market ended the day on a positive note with 36% of the earlier gains of the day intact, while the New York market ended the day on a negative note with 39.13% of the earlier losses of the day intact. This mixed but overall modest softer close for the markets, with the New York market settling on a softer note but recovering most of the earlier losses of the day under relatively thin volumes of trade, does little to indicate direction and one might therefore think that the markets are due for a hesitant steady start to early trade today, against the prices set on Friday, as follows:

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

JAN    1836 + 9                                        DEC   170.10 – 0.90
MAR  1825 + 11                                      MAR  168.10 + 0.40
MAY  1817 + 12                                      MAY  167.50 + 0.60
JUL    1810 + 12                                      JUL    166.95 + 0.75
SEP    1803 + 12                                      SEP    166.05 + 0.70
NOV  1797 + 13                                      DEC   165.15 + 0.55
JAN   1806 + 13                                      MAR  165.45 + 0.55
MAR 1815 + 13                                      MAY  165.70 + 0.50