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 increase their net long position by 6.08% within this market over the week of trade leading up to Tuesday 23rd. May 2023; to register a new net long position at 28,988 Lots. The longer term in nature Index Fund sector of this market marginally decreased their net long position by 0.28% within the market, to register a new net long position of 60,111 Lots on the day.
Over the same week, the Non-Commercial Speculative increased their net long position by 16.16% within the market over the week of trade leading to Tuesday 23rd. May 2023: to register a new net long position of 14,879 lots, which is the equivalent of 4,218,131 bags. This net long position has most likely been marginally decreased following the period of mixed but overall softer trade that has since followed.
The respected U.S. Department of Agriculture Global Agricultural Network USDA have reported their forecast for the exclusively arabica coffee crop from Ethiopia for the new October 2023 to September 2024 coffee crop year shall be 0.97% higher than the previous October 2022 to September 2023 crop, at a total of 8.35 million bags.
Of this new crop, the forecast is that Ethiopia will export around the same figure as the previous marketing year at a total of 4.83 million bags of green coffee. The domestic consumption for Ethiopia over the October 2023 to September 2024 coffee year is forecast to be 1.45% or 50,000 bags higher than the October 2022 to September 2023 coffee year at a total of 3.48 million bags, the report cites an increase in the number of small roadside coffee stalls that are selling coffee. This country, the home of arabica coffee, with a historic coffee consumption tradition that is mostly informal and while difficult to definitively to pin down statistically for reporting purposes, is nevertheless the largest coffee consumer country in Africa. The USDA report indicates a positive outlook for an increase in domestic coffee consumption and growth in the out of home sector following the post pandemic ease of restrictions and potential for out of home coffee consumption recovery.
The Certified washed Arabica coffee stocks held against the New York exchange with the exchange closed for the Memorial Day holiday remained unchanged yesterday, to register these stocks at 598,493 bags, with 97.33% of these certified stocks being held in, Europe at a total of 582,514 bags and the remaining 2.67% being held in the USA at a total 15,979. Of this, a total 209,222 bags, or 34.96% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 61.05% of these certified coffees, originating from Honduras. There was meanwhile a no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.
The July 2023 to July 2023 contract arbitrage between the London and New York markets narrowed on Friday to register this at 64.85 usc/Lb. This equates to 35.71% price discount for the London Robusta coffee market.
The commodity markets lacked the participation of many of the U.S.A based markets yesterday, which were closed due to the Memorial Day holiday on Monday the 29th May, to provide no direction for the overall macro commodity index for the day. The London Robusta Coffee, Sugar, Cocoa, Corn, Soybean, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the New York Arabica Coffee market ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.235 Sterling, at 1.071 the Euro and with the US Dollar buying 5.091 Brazil Real.
The New York market started the day on Friday trading to the south of par in modest softer territory, while the London market started the day trading to the North of par on a firmer note. Both markets were seen to oscillate around par for the remainder of the early morning session. The New York market attracted some degree of buying support to see the market trend in a firmer direction during the late morning session, with the London market following suit. As the afternoon progressed the London market, continued to trend firmer, accentuating the gains for the day, while the New York market continued to trade firmer before hitting a ceiling to limit the gains for the day during the mid-afternoon session. The New York market attracted fresh selling activity late in the day, to see the market trend back below par and extend the losses for the day, this saw the New York market settle on a softer note at the close, while the London market continued to trend firmer before being capped late in the day, to see the market settle on a firmer note at the close.
The London market ended the day on Friday on a positive note with 45.65% of the earlier gains of the day intact, while the New York market ended the day on Friday on a negative note with 45.83% of the earlier losses of the day intact. This mixed close for the markets does little to inspire confidence, with the New York market dropping back from highs of the day to settle on a negative note towards the close, and the London market retaining some of the earlier gains 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.
Close: 26/05/2023 Close: 26/05/2023
JUL 2574 + 21 JUL 181.60 – 1.10
SEP 2528 + 20 SEP 179.55 – 1.10
NOV 2469 + 12 DEC 177.65 – 1.15
JAN 2421 + 6 MAR 177.50 – 1.15
MAR 2401 + 4 MAY 178.00 – 1.15
MAY 2392 + 1 JUL 178.60 – 1.20
JUL 2389 + 1 SEP 179.35 – 1.35
SEP 2382 + 1 DEC 180.35 – 1.40
