Coffee Market Report
The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of January were 92,334 bags or 22.97% higher than the same month last year, at a total of 494,226 bags. Uganda Robusta exports registered a 30.91% increase when compared to the same month last year, this could be attributed the pandemic related logistical bottlenecks that were experienced throughout the same time, to total 412,282 bags and Arabica exports registered a comparative 5.76% decrease when compared to the same month last year to total 81,944 bags exported in January 2023. The UCDA also reports that the cumulative exports for the first four months of the current October 2022 to September 2023 coffee year to be 135,003 bags or 6.92% lower than the same period in the previous year, at a total of 1,815,037 bags. The UCDA have reported that during the month of January, the overall value of coffee exports has been seen to have increased by 8.73% when compared to the same month in the previous year, to total 67.35 million US Dollars. There are reports meanwhile, that the robusta coffee crop is slow to reach the market, to indicate that the crop may not be as large as was initially forecast ahead of time. The initial robusta October 2022 to September 2023 crop was forecast at a level of around 5.50 million bags, a figure that will likely be adjusted in line with the apparent and unanticipated decline in robusta production.
The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector decrease their net short position by 49.81% within the market over the week of trade leading to Tuesday 31st. January 2023: to register a new net short sold position of 20,088 lots, which is the equivalent of 5,694,858 bags. This net short position has most likely been decreased further and possibly switched to a new net long position through the period of overall firmer trade that has followed.
The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector switch to a new net long position within the market over the week of trade leading to Tuesday 31st. January 2023: to register a new net long position of 5,325 Lots which is the equivalent of 887,500 bags. This net long position has most likely been increased further following the period of overall firmer trade that has since followed.
This is the first report release from the Commodity Futures Trading Commission since the 24th January 2023. Subsequent Commitment of Traders report from the New York Arabica and London Robusta markets will follow, to be released in succession, until the Commitment of Traders reports are up to date.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 9,429 bags on Friday, to register these stocks at 800,137 bags, with 95.06% of these certified stocks being held in, Europe at a total of 760,604 bags and the remaining 4.94% being held in the USA at a total 39,533. Of this, a total 402,384 bags, or 50.29% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 46.48% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 10,412 bags pending grading on the day.
The May 2023 to May 2023 contract arbitrage between the London and New York markets narrowed on Friday to register this at 90.13 usc/Lb. This equates to 48.02% 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.
It was a softer day overall on the commodity markets on Friday, with the US Dollar taking a firmer track against a basket of other currencies, following latest USA consumer spending data released on Friday, received by the markets as indicative of continued inflation in this largest consumer market. The Coffee, Cocoa, Corn, Sugar, 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 1.195 Sterling, at 1.055 the Euro and with the US Dollar buying 5.210 Brazil Real.
The New York market started the day on Friday trading to the south of par on a modest softer note, while the London market started the day trading on a firmer note. Both markets were pressured lower during the early morning session by some degree of selling. As the afternoon progressed, both the New York and London markets continued on a softer path before hitting a floor to limit the losses for the day. This saw both markets rebound from the lows of the early afternoon session, to gain momentum and recover some of the losses. The markets were seen to trend back towards par during the late afternoon session, however this support was short lived and the markets fell back before the close to see both the New York and the London markets settle on softer notes respectively.
The London market ended the day on a negative note with 37.04% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 52.63% of the earlier losses of the day intact. This follow through softer close for the markets, albeit that both the New York and the London markets recovered most of the earlier losses of the day, might see the markets set for a hesitant start to early trade today, against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAY 2151 – 10 MAY 187.70 – 2.00
JUL 2137 – 13 JUL 186.00 – 2.10
SEP 2114 – 14 SEP 183.75 – 2.20
NOV 2082 – 14 DEC 181.65 – 2.15
JAN 2064 – 14 MAR 181.30 – 2.10
MAR 2058 – 14 MAY 181.75 – 2.00
MAY 2059 – 14 JUL 181.85 – 2.10
JUL 2065 – 14 SEP 182.00 – 2.10
