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 6.90% within this market over the week of trade leading up to Tuesday 27th February 2024; to register a new long position at 42,665 Lots. The longer term in nature Index Fund sector of this market decreased their net long position by 7.54% within the market, to register a new net long position of 50,409 Lots on the day.

Over the same week, the Non-Commercial Speculative decreased their net long position by 6.08% within the market over the week of trade leading to Tuesday 27th February 2024: to register a new net long position of 32,126 lots, which is the equivalent of 9,107,578 bags. This net long position has most likely been little changed following the period of mixed but overall, marginally firmer trade that has since followed.

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 weather in Brazil will continue to be monitored throughout the month of March, with average levels of rainfall reported across the main coffee growing areas of Sul de Minas and Zona da Mata during February, assisting to increase the soil moisture levels during this peak summer period. Weather forecasters are predicting rainfall to continue during the month of March, which would be considered seasonally normal for this time of year. The Conilon robusta crop readies to begin harvest, while the biennial bearing arabica coffee crop continues to develop, rains are traditionally sought out, ahead of the usually anticipated mid-year harvesting to start in these areas.

The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 10,560 bags yesterday, to register these stocks at 371,107 bags, with 98.85% of these certified stocks being held in, Europe at a total of 366,852 bags and the remaining 1.18% being held in the USA at a total 4,255 Bags. Of this, a total 165,983 bags, or 44.72% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 32.21% of these certified coffees, originating from Honduras. The pending grading stocks were seen to increase by 2,050 bags; to register 159,422 bags pending grading on the day.

The May 2024 to May 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 42.25 Usc/Lb. This equates to 22.61% price discount for the London Robusta coffee.

It was a firmer day on the commodity markets yesterday, ahead of a key address by the US Federal Reserve Chairman later this week, where many expect a dovish stance on interest rates and cues of potential cuts to begin in June. The Coffee, Cocoa, Corn, Soybean, Sugar, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note. The day starts with the U.S. Dollar trading at 1.269 Sterling, at 1.085 the Euro and with the US Dollar buying 4.946 Brazil Real.

The New York and London markets started the day carrying through momentum from previous days close to trade to the north of par on a firmer note. The New York market was seen to oscillate around par before gaining momentum to trend in a firmer direction into the mid-morning session, while the London market was seen to follow suit, making gains during the early morning session. As the afternoon progressed, the arrival of the America’s at the start of their business day pushed the New York market further into positive territory, triggering buy stops along the way to accentuate the gains for the day. The day recorded good volumes of trade in New York, with both the New York and London markets continuing to project in a firmer direction before encountering resistance to set a ceiling for the day. This saw the markets pressured back towards par as sellers returned to the floor, late in the day. The New York market settled on a firmer note, with some of the earlier gains of the day intact whilst the London market followed suit to also settle on a firmer note at the close with less than half of the earlier gains of the day intact.

The London market ended the day on a positive note with 48.42% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 57.14% of the earlier gains of the day intact. This firmer close for the markets, might inspire some degree of follow through momentum for the markets, albeit that the New York and London markets dropped back from the earlier highs of the day to maintain only some of the earlier gains, one might think that the markets are set for a steady start to early trade today, against the prices set yesterday, as follows:

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

MAY   3189 + 46                                        MAY   186.90 + 3.60
JUL     3105 + 48                                        JUL     184.50 + 3.10
SEP     3026 + 46                                       SEP      183.75 + 2.65
NOV   2934 + 37                                       DEC     183.15 + 2.20
JAN    2868 + 40                                       MAR    183.30 + 2.10
MAR  2834 + 32                                       MAY    183.50 + 1.90
MAY  2808 + 30                                       JUL      183.35 + 1.65
JUL    2787 + 30                                       SEP      182.90 + 1.40