Coffee Market Report
The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increase their net short position by 20.89% within the market over the week of trade leading to Tuesday 15th. November 2022: to register a new net short sold position of 23,378 lots, which is the equivalent of 6,627,559 bags. This net short position has most likely been decreased further following the period of softer trade that has since followed.
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 21.37% within the market over the week of trade leading to Tuesday 15th. November 2022: to register a new net short sold position of 28,541 Lots which is the equivalent of 4,756,833 bags. This net short position has most likely been marginally decreased following the period of mixed but overall softer trade that has since followed.
The respected United States Department of Agriculture USDA Global Agricultural Information Network have revised their estimate for the October 2022 to September 2023 Indian coffee crop production, higher by 8.71% at a total 6,240,000 bags. This revised figure is made up from the production of 1,320,000 bags of arabica coffee and 4,920,000 bags of robusta coffee. The report further anticipates green coffee exports from this primarily Robusta producing country to reach 4,170,000 bags in the October 2022 to September 2023 coffee year.
The USDA estimates October 2022 to September 2023 yields for Arabica and Robusta coffee at an average of 866 kilograms, per hectare which is a five percent improvement on the previous year. The USDA estimates the October 2022 to September 2023 Indian domestic coffee consumption to grow by 8.20% to 1,320,000 bags when compared to the previous year. This is largely driven by sales of soluble coffee for at home consumption through e-commerce and retail channels. As well as a rise in at home consumption that will be supported by the functioning of the hospitality (hotels, restaurants, catering events) and institutional (corporate offices, airports) sectors.
The January 2023 to March 2023 contract arbitrage between the London and New York markets narrowed on Friday to register this at 72.95 usc/Lb. This equates to 47.03% 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 13,720 bags on Friday, to register these stocks at 497,809 bags, with 89.36% of these certified stocks being held in Europe at a total of 444,851 bags and the remaining 10.64% being held in the USA at a total 52,958. Of this, a total 293,501 bags, or 58.96% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 35.72% of these certified coffees, originating from Honduras. There was meanwhile a 15,050 bags decrease to the number of bags pending grading to the exchange; to register 569,638 bags pending grading on the day.
It was a softer day the commodity markets on Friday, as the US Dollar index steadied under pressure from comments from the US Federal Reserve suggesting inflation in the world’s biggest economy was not yet under control and that further interest rate hikes were on the cards. The Cocoa, Sugar, Corn and Soybean markets ended the day on a positive note, while the Coffee, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.183 Sterling, at 1.028 the Euro and with the US Dollar buying 5.383 Brazil Real.
The New York and London markets started the day on Friday trading on a modest firmer note. Both the New York and the London markets oscillated around par for the remainder of the mid-morning session before attracting some degree of support to see the markets trend in a firmer direction buoyed by buying activity during the late morning session. As the afternoon progressed, both the New York and the London markets were seen to hit a ceiling for the day, limiting the gains and to see the markets fall back attracting some degree of selling pressure which saw both the New York and London markets track below par. The markets rebounded from the lows late in the day, to see the New York market recover some of the earlier losses to settle on a softer note at the close, while the London market followed suit to likewise settle on a modest near to unchanged softer note at the close.
The London market ended the day on a modest near to unchanged negative note with 50% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 67.57% of the earlier losses of the day intact. This follow through softer close for the markets does little to inspire confidence, albeit that both the New York and the London markets recovered some of the earlier losses of the day as the markets bounced off 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 as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 1811 – 7 MAR 155.10 – 1.25
MAR 1787 – 7 MAY 155.70 – 1.30
MAY 1779 – 6 JUL 156.20 – 1.15
JUL 1774 – 6 SEP 156.30 – 1.05
SEP 1769 – 6 DEC 156.55 – 1.05
NOV 1763 – 6 MAR 157.55 – 1.05
JAN 1772– 6 MAY 158.25 – 1.10
MAR 1781– 6 JUL 158.95 – 1.10
