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 decrease their net long position by 9.32% within this market over the week of trade leading up to Tuesday 20th February 2024; to register a new long position at 45,829 Lots. The longer term in nature Index Fund sector of this market decreased their net long position by 1.47% within the market, to register a new net long position of 54,519 Lots on the day.
Over the same week, the Non-Commercial Speculative decreased their net long position by 10.13% within the market over the week of trade leading to Tuesday 20th February 2024: to register a new net long position of 34,206 lots, which is the equivalent of 9,697,249 bags. This net long position has most likely been decreased further following the period of mixed but overall softer trade that has since followed.
The new coffee crop to come from Indonesia is set to start coming to the fore in the next couple of months as harvest of robusta coffees will soon begin for their April 2024 to March 2025 coffee year. The new coffee crop which is around 80% robusta coffee and the balance arabica coffee, has been forecast ahead of the harvest to potentially reach a median of 10.50 million bags. Of this total one might anticipate that the country’s export performance this seasonal year might surpass their five-year average of 7 million bags, as the strong internal demand for coffees for conversion into value added products may be countered with increased export demand as consumer markets continue to show high demand for robusta coffees.
The weather conditions within Brazil meanwhile forecast that rainfall for the month of February thus far has been below average, however increased rainfall over the last days of the month may result in cumulative rainfall for the month recording close to seasonally normal levels. There are forecasts ahead for further rains to fall during the first half of March as the country heads towards the traditionally drier winter months ahead.
The latest round of economic data is due to be released in the U.S.A. later this week, which will detail the world’s leading economy’s inflation numbers, which may have an influence on the markets in general terms. This month has seen the strengthening of the US Dollar against a basket of currencies, and the related loss in value in the Brazil Real, which has depreciated by 1.81% during the month of February thus far and settled around the low for the month against the US Dollar, yesterday. The Brazil Real weakness to the US Dollar can traditionally encourage increased selling activity within the interior of Brazil, as returns to producers are increased in Brazil Real terms, which is likely to assist in having some impact upon the direction of the New York futures markets, albeit that producers are relatively well financed at this stage and hold back from volume sales.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 8,640 bags yesterday, to register these stocks at 332,797 bags, with 98.56% of these certified stocks being held in, Europe at a total of 327,992 bags and the remaining 1.44% being held in the USA at a total 4,805 Bags. Of this, a total 129,454 bags, or 38.90% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 36.12% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 1,540 bags; to register 125,881 bags pending grading on the day.
The May 2024 to May 2024 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 42.61 Usc/Lb. This equates to 23.72% price discount for the London Robusta coffee.
It was a mixed day on the commodity markets yesterday, with the markets focused on US Inflation data due out later this week, which could provide a timeline on interest rate cuts. The Cocoa, Corn, Sugar, Soybean and Wheat markets ended the day on a positive note, while the Coffee, Gold, Silver, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.268 Sterling, at 1.085 the Euro and with the US Dollar buying 4.980 Brazil Real.
The New York and London markets started the day yesterday trading to the south of par on a modest softer note. Both markets quickly attracted buying support to trend firmer throughout the remainder of the morning session. As the afternoon progressed the markets continued to trend firmer, gaining momentum throughout the session before hitting a ceiling to limit the gains for the day. The markets dropped back from the highs of the day, as speculative selling returned to the floor in modest volumes for the day, to trigger stops along the way and accentuate the losses for the session. The New York market rebounded from the modest lows of the day, late in the day to find support and recover some of the losses, while the London market rebounded from the lows of the day to recover almost half of the earlier losses of the day and to settle on a modest softer note at the close.
The London market ended the day on a modest negative note with 52.63% of the earlier losses of the day intact, while the New York market ended the day on a likewise modest negative note with 66.67% of the earlier losses of the day intact. This follow through softer close for the markets does little to indicate direction, albeit that the markets traded under modest volumes, the New York market maintained most of the earlier losses to end the day and one might think that the markets are due for a steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAY 3020 – 10 MAY 179.60 – 0.70
JUL 2964 – 7 JUL 178.80 – 0.25
SEP 2912 – 11 SEP 178.80 – 0.25
NOV 2864 – 13 DEC 179.10 – 0.25
JAN 2816 – 13 MAR 179.35 – 0.30
MAR 2783 – 13 MAY 179.70 – 0.30
MAY 2761 – 13 JUL 179.65 – 0.35
JUL 2742 – 13 SEP 179.40 – 0.40
