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 0.94% within this market over the week of trade leading up to Tuesday 28th. November 2023; to register a new long position at 25,997 Lots. The longer term in nature Index Fund sector of this market posted a decrease to their net long position by 1.60% within the market, to register a new net long position of 55,395 Lots on the day.
Over the same week, the Non-Commercial Speculative increase their net long position by 7.61% within the market over the week of trade leading to Tuesday 28th. November 2023: to register a new net long position of 13,450 lots, which is the equivalent of 3,813,015 bags. This net long position has most likely been increased further following the period of firmer trade that has since followed.
The National Coffee Institute of Costa Rica (ICAFE) have reported that the country’s coffee exports for the month of November were 36.91% higher than the same month last year, at a total of 17,723 bags. This they say has contributed to the cumulative coffee exports for the first two months of the current October 2023 to September 2024 coffee year to be 69% higher than the same period in the previous year, at a total of 36,622 bags. The National Coffee Institute of Costa Rica (ICAFE) have estimated production for the 23/24 coffee year will total 1.47 million bags or 0.2% lower than the previous coffee year.
Uganda, the leading robusta coffee producer in Africa and fourth largest robusta exporter to non-producing consumer markets, has experienced significantly above average rainfall for the time of year. This has led to a delayed start to their October 2023 to September 2024 coffee crop year, with limited coffee flow from producing areas to Kampala. The median estimate for robusta production from Uganda is estimated at 5.50 million bags or 12.25% larger than the previous year.
The well-respected United States Department of Agriculture Foreign Agricultural Service USDA have reported that Africa’s largest coffee producer Ethiopia will potentially produce 8.35 million bags for the current October 2023 to September 2024 coffee year, this figure 80,000 bags or 0.97% larger than the previous crop. Based on this crop and with the country having a vibrant domestic consumption that the USDA estimates to be approximately 3.50 million bags per annum, it is forecasted that the Ethiopian coffee exports for the current October 2023 to September 2024 coffee year shall be approximately 4.82 million bags or on par with the previous year. While Ethiopian coffee exports are officially registered with the authorities, there really is no clarity in terms of domestic consumption. Consumption within Ethiopia is heavily weighted towards home roasting farmers; thus, while one cannot easily quantify how much coffee is consumed within the country, there is a considerable volume of coffee that is home roasted and not declared, with informal coffee shared with home roasting family and friends within the urban districts of the country.
Weather conditions within Ethiopia have been reported to have improved in the growing areas which will allay concerns over the impact of unseasonal rains on quality. The business environment within the country remains challenging, with complexities surrounding the reported severe shortage of foreign currency and logistical contributory factors within the country.
The anticipated regulation that has been implemented by the Intercontinental Exchange, prohibiting the practice of re-submission and grading of arabica coffees that had previously been certified for delivery and subsequently decertified, came into force on Friday 1st December 2023. This regulation is intended to stop older coffees being retrieved from the exchange, represented for grading and re-entering the exchange as fresh stocks, without age penalties or price reductions that the exchange applies for coffees that have been stored in the exchange warehouses for years.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday, to register these stocks at 224,066 bags, another record low, with 97.80% of these certified stocks being held in, Europe at a total of 219,138 bags and the remaining 2.20% being held in the USA at a total 4,928 Bags. Of this, a total 33,572 bags, or 14.98% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 71.52% of these certified coffees, originating from Honduras. There was meanwhile a 849 bags increase to the number of bags pending grading to the exchange; to register 27,834 bags pending grading on the day.
The January 2024 to March 2024 contract arbitrage between the London and New York markets narrowed yesterday to register this at 63.92 Usc/Lb. This equates to 35.63% price discount for the London Robusta coffee.
It was a softer day on the commodity markets yesterday, with the leading in influence Oil markets softer on the day. The Corn and Wheat markets ended the day on firmer note, while the Coffee, Cocoa, Soybean, Sugar, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.264 Sterling, at 1.084 the Euro and with the US Dollar buying 4.944 Brazil Real.
The New York market started the day yesterday trading on a firmer note, while the London market started the day trading to the south of par on a softer note. Both markets continued to oscillate to either side of par for the remainder of the early morning session before attracting some degree of selling pressure to see the markets trend below par during the later morning session. As the afternoon progressed, the New York and London markets continued to trend in a softer direction, weighed by selling in the markets. The markets hit a floor during the mid-afternoon session, to rebound from the lows of the day. The selling pressure started to wane towards the end of the day’s trade, to see the New York market recovering some of the earlier losses. The London market settled on a softer note, recovering most of the earlier losses of the day.
The London market ended the day on a negative note with 35.14% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 59.28% of the earlier losses of the day intact. This follow through softer close for the markets does little to indicate direction, albeit that the New York market recovered some of the earlier losses to settle on a softer note, one might think that the markets are due for a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 2546 – 26 MAR 179.40 – 4.95
MAR 2513 – 15 MAY 177.25 – 4.45
MAY 2478 – 12 JUL 177.75 – 4.35
JUL 2445 – 12 SEP 178.85 – 4.05
SEP 2415 – 16 DEC 180.70 – 3.75
NOV 2398 – 16 MAR 182.65 – 3.65
JAN 2383 – 16 MAY 183.55 – 3.55
MAR 2374 – 16 JUL 184.25 – 3.55
