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 20.26% within the market over the week of trade leading to Tuesday 22nd. August 2023: to register a new net short position of 31,318 lots, which is the equivalent of 8,878,514 bags. This net short position has most likely been little changed following the period of overall sideways trade that has since followed.

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector decrease their net long position by 38.24% within the market over the week of trade leading to Tuesday 22nd. August 2023: to register a new net long position of 17,187 Lots which is the equivalent of 2,864,500 bags. This net long position has most likely been little changed following the period of mixed but overall firmer trade that has since followed.

Safras & Mercado have estimated that almost 95% of the new Brazil coffee crop has already been harvested. Based on their forecast for a new crop of 66.65 million bags, the report would indicate that so far approximately 63.50 million bags of the new crop coffee have been harvested, the coffee made up of around 22.50 million bags of Conilon Robusta coffee, and approximately 41 million bags of arabica coffee harvested thus far.

The focus of the Coffee markets remains on Brazil as the largest coffee producer completes the biennial harvest of the July 2023 to June 2024 coffee harvest. With the month of August, which is seasonally the last of the winter months now at an end, weather forecasters indicate moderate to warm weather conditions for the next fortnight. Speculative focus may soon be turning to the longer-term forecasts and weather prospects for the onset of the new spring and summer rain season for Brazil, seasonally due through the last quarter of the year and this weather necessary to trigger the flowering that is due to set the next biennial bearing larger 2024 crop to come.

The Brazil Real currency has strengthened by 2.61% against the US Dollar over the past seven days. A stronger Brazil Real traditionally discourages export selling from Brazil’s coffee producers, which could see a degree of internal price resistance and a reticence of producers to sell coffee at current market levels.

Today sees the UK celebrate their Summer Bank Holiday, this shall see the London Robusta Market closed for the day, leaving the New York market to trade solo today.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease to remain unchanged on Friday, to register these stocks at 512,753 bags, with 98.36% of these certified stocks being held in, Europe at a total of 504,320 bags and the remaining 1.64% being held in the USA at a total 8,433. Of this, a total 152,075 bags, or 29.66% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 65.34% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.

The November 2023 to December 2023 contract arbitrage between the London and New York markets narrowed on Friday to register this at 42.61 usc/Lb. This equates to 27.82% price discount for the London Robusta coffee.

It was mixed but overall firmer day on the commodity markets on Friday, with the leading in influence Oil markets firmer on the day. The London Robusta Coffee, Cocoa, Sugar, Soybean, Silver and Platinum markets ended the day on a positive note, while the New York Arabica Coffee, Corn, Wheat, Gold and Palladium The day starts with the U.S. Dollar trading at 1.260 Sterling, at 1.081 the Euro and with the US Dollar buying 4.871 Brazil Real.

The New York and London markets started the day on Friday trading to the south of par on a modest softer note respectively. The New York market continued to oscillate to either side of par as the morning progressed, with the London market following suit. As the afternoon progressed the London market found support to trend in a firmer direction, while the New York market was seen to drop back from the modest highs of the morning session and trend in a softer direction. The late afternoon session saw the London market drop back from the earlier highs and settle on a firmer note at the close. The New York market rebounded from the earlier lows to recover late in the day and see the market settle on a modest softer note at the close.

The London market ended the day on a positive note with 79.49% of the earlier gains of the day intact, while the New York market ended the day on a negative note with 32.86% of the earlier losses of the day intact. This mixed close for the markets, albeit that the New York market recovered most of the earlier losses of the day to settle near on a softer note, does little to indicate direction and one might think that the markets are due for a follow through hesitant start to early trade today, against the prices set on Friday, as follows:

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

NOV   2437 + 31                                         DEC     153.15 – 1.15
JAN    2349 + 24                                         MAR    154.30 – 1.00
MAR  2311 + 22                                         MAY     155.20 – 0.90
MAY  2294 + 19                                         JUL       155.80 – 0.95
JUL    2287 + 15                                         SEP      156.45 – 1.00
SEP    2282 + 12                                         DEC     157.65 – 1.00
NOV  2280 + 10                                         MAR    158.75 – 0.90
JAN   2276 + 12                                         MAY    159.80 – 0.90