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 7.99% within this market over the week of trade leading up to Tuesday 23rd. January 2024; to register a new long position at 46,141 Lots. The longer term in nature Index Fund sector of this market decreased their net long position by 3.24% within the market, to register a new net long position of 53,013 Lots on the day.
Over the same week, the Non-Commercial Speculative increased their net long position by 14.06% within the market over the week of trade leading to Tuesday 23rd. January 2024: to register a new net long position of 33,365 lots, which is the equivalent of 9,458,830 bags. This net long position has most likely been increased further following the period of firmer trade that has since followed.
The European Coffee Federation, E.C.F. have reported that the port warehouse coffee stocks held within reporting warehouses in Belgium, Germany, France, Italy and Spain, to have registered a 3.87% decrease during the month of December 2023 to total 7,284,317 bags at the end of the month. The stocks are reported as 2,409,317 bags robusta coffee, 2,161,133 bags natural arabica coffee Including Brazil semi-washed and 2,713,883 bags washed arabica coffee. These stocks do not necessarily include the privately held, unreported stocks from the industry, onsite inventory, nor the in-transit bulk container stocks and the stocks being held within non-reporting warehouses throughout Europe.
The combination of EU27 countries and the UK, consumption is put somewhere in the region of 950,000 bags of coffee a week. One might anticipate additional stock not included in the report, when considering the privately held stocks in European consumer countries, which could contribute to as much as 1.25 million bags to the reported stocks. An estimate therefore that as at the end of December 2023 European coffee stocks might have been close to the equivalent of seven to eight weeks of European roasting demand and near to the lowest levels seen since 2000.
The Ethiopian government announced this week that coffee exports had generated US$ 571 million in revenue during the first half of its fiscal year, recorded from July 2023 to December 2023. The report further illustrates that Africa’s largest producer and consumer of coffee exported 1,965,917 bags of coffee during the second half of 2023, with major export destinations listed as Saudi Arabia, South Korea, the United States, Germany, Japan and China. In comparison and during the previous complete Ethiopian 2022/2023 fiscal year the government reported coffee revenue of US$ 1.30 billion from the export of 4 million bags of coffee.
Ethiopia will potentially produce 7 million bags arabica coffee for the current October 2023 to September 2024 coffee year. This country having a vibrant domestic consumption that it is estimated at approximately 3.50 million bags per annum, makes it a little more difficult to pin the actual production figures, and disappearance year on year, however, the USDA estimate for production this year is marginally larger than the previous crop. It is estimated that the country should be in a position to export approximately 3.90 million bags in the current October 2023 to September 2024 coffee year.
The 20th African Fine Coffees Association (AFCA) conference and exhibition is to be held from 6th until 10th February in Ethiopia this year, with the theme Specialty Coffee at Origin. This annual event is anticipated to bring coffee sustainability, farmers, industry, policy makers, service providers and trade to the Millenium Conference Centre in Addis Ababa www.afca.coffee/conference.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,741 bags yesterday, to register these stocks at 243,465 bags, with 97.76% of these certified stocks being held in, Europe at a total of 238,014 bags and the remaining 2.24% being held in the USA at a total 5,451 Bags. Of this, a total 62,088 bags, or 25.50% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 52.28% of these certified coffees, originating from Honduras. There was meanwhile, an increase of 8,290 bags in the number of bags pending grading to the exchange; to register 81,998 bags pending grading on the day.
The March 2024 to March 2024 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 40.70 Usc/Lb. This equates to 21.51% price discount for the London Robusta coffee.
It was a mixed but overall softer day on the commodity markets yesterday, with the leading in influence Oil market softer on the day, ahead of the awaited policy meetings taking place in the USA today and tomorrow. The London Robusta Coffee, Cocoa, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the New York Arabica Coffee, Oil, Corn, Sugar, Soybean and Wheat markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.271 Sterling, at 1.083 the Euro and with the US Dollar buying 4.952 Brazil Real.
The New York market started the day yesterday trading on a very soft note, while the London market started the day trading to the north of par in firmer territory, both markets were seen to oscillate around par for the remainder of the early morning session. The New York and London markets gained momentum early in the day to see both markets set highs during the morning session. The New York market hit a ceiling to limit the gains for the day and to see the market attract a large degree of selling pressure drop back and trend softer into the late morning session. As the afternoon progressed the London market was seen to build support and make gains for the day, this saw the market continue to trend in a firmer direction before being capped to limit the gains for the day during the early afternoon session, while the New York market continued to trend in a softer direction, extending the day's losses. The New York market attracted fresh buying activity late in the day, limiting the losses for the day during the afternoon session. This market registered a recovery albeit to settle on a negative note at the close, while the London market settled on a modest near to unchanged firmer note at the close, maintaining some of the earlier gains of the day.
The London market ended the day on a modest positive note with 10.53% of the earlier gains of the day intact, while the New York market ended the day on a negative note with 88.46% of the earlier losses of the day intact. This mixed but overall softer close for the markets does little to inspire confidence, with the New York market dropping back to settle on a negative note with most of the losses of the day intact towards the close and the London market settling near to unchanged on the day, one might think the markets might be due for a hesitant start to early trade, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAR 3275 + 6 MAR 189.25 – 4.60
MAY 3122 + 10 MAY 186.05 – 3.40
JUL 3000 Unch JUL 185.30 – 2.65
SEP 2903 – 7 SEP 185.35 – 2.25
NOV 2843 – 12 DEC 186.00 – 2.30
JAN 2810 – 12 MAR 186.00 – 2.40
MAR 2792 – 12 MAY 186.95 – 2.35
MAY 2775 – 12 JUL 187.20 – 2.30
