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 marginally increase their net long position by 0.23% within this market over the week of trade leading up to Tuesday 30th. April 2024; to register a new long position at 68,340 Lots. The longer term in nature, Index Fund sector of this market marginally decreased their net long position by 3.53% within the market, to register a new net long position of 50,652 Lots on the day.
Over the same week, the Non-Commercial Speculative decrease their net long position by 3.41% within the market over the week of trade leading to Tuesday 30th. April 2024: to register a new net long position of 48,976 lots, which is the equivalent of 13,884,479 bags. This net long position has most likely been decreased further following the period of softer trade that has since followed.
The respected United States Department of Agriculture USDA Global Agricultural Information Network have reported that the October 2024 to September 2025 Indian coffee crop shall be 1.49% smaller than the previous year at a total of 5,970,000 bags. This figure is made up from the production of 1,420,000 bags of arabica coffee and 4,550,000 bags of robusta coffee. The report further anticipates green coffee exports from this primarily Robusta producing country to reach 4,200,000 bags in the October 2024 to September 2025 coffee year. 1.18% lower than the previous year.
In the same report, the USDA reports that the marginal decrease in production expected during the October 2024 to September 2025 crop year is due to a lack of adequate moisture after deficit pre-monsoon rains that occurred post excess rains from January through February. According to the Indian Meteorological Department, the major coffee growing regions in south Karnataka received excess rains between January and February, which were followed by drier conditions during pre-monsoon rains that provided limited moisture. The USDA estimates October 2024 to September 2025 yields for Arabica at 402 kilograms, per hectare, three percent lower than last year. The yields for Robusta are estimated at 1,230 kilograms per hectare, two percent lower than last year.
The USDA estimates the October 2024 to September 2025 Indian domestic coffee consumption to grow by nearly 1.50% year on year to reach 1,320,000 bags. This is largely driven by growth in sales of soluble coffee for at home consumption through retail and e-commerce channels, as per the USDA report. This in-home consumption of coffee, an important driver of demand is expected to rise with the increased demand for instant coffee (soluble coffee). Estimated soluble coffee consumption at 920,000 bags, 2.20% percent higher than last year.
Weather conditions within Vietnam have seen improvements over the past week, as this largest Robusta producer country has passed the midway point of their October 2023 to September 2024 coffee year, and the new October 2024 to September 2025 crop, develops. The central highlands of Vietnam have experienced increased rainfall during the first week of May, which was well needed post a drier than normal month of April. One might comment however that weather forecasters are still expecting lower than average rainfall for the month of May, which will be closely monitored by coffee market players. Traditionally the rain season within Vietnam should begin in April and run through to around October each year.
Within Brazil, heavy rains have resulted in widespread flooding within the countries southernmost state of Rio Grande do Sul. This area is somewhat away from the coffee growing regions, however, remains a humanitarian disaster as the floods have destroyed roads and bridges in several cities, triggering landslides and leaving a path of destruction. Weather conditions are expected to remain tenuous as rains continue to fall over the region in the week to come.
The London Robusta coffee market was closed yesterday as the United Kingdom observed a Bank Holiday, which left the New York Arabica coffee futures terminal market trading solo for a shortened day of trade yesterday.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to decrease by 2,220 bags yesterday, to register these stocks at 686,958 bags, with 99.23% of these certified stocks being held in, Europe at a total of 681,644 bags and the remaining 0.77% being held in the USA at a total 5,314 Bags. Of this, a total 322,528 bags, or 46.95% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 16.81% of these certified coffees, originating from Honduras. The pending grading stocks were seen to increase by 32.124 bags; to register 117,977 bags pending grading on the day.
The July 2024 to July 2024 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 34.59 Usc/Lb. This equates to 17.72% price discount for the London Robusta coffee.
It was a mixed but overall firmer day on the commodity markets yesterday, on the back of a weakening US Dollar, which is seen to be a bullish factor for commodities traded in other currencies. The Corn, Sugar, Soybean, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on a positive note, while the Coffee and Cocoa markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.255 Sterling, at 1.076 the Euro and with the US Dollar buying 5.076 Brazil Real.
The New York market trading solo for a shortened day yesterday started the day trading on a negative note, with the market quickly tracking softer under modest volumes of trade. The market continued to trend softer throughout the morning session into the early afternoon session. As the afternoon progressed the New York market would continue to be pressured by long liquidation to see the market hit a low for the day. The market rebounded off the lows of the day to recover slightly during the late afternoon session, this saw the New York market settle on a very soft note at the close.
The London market ended the day on Friday on a negative note with 95.21% of the earlier losses of the day intact, while the New York market ended the day yesterday on a likewise negative note, with 89.52% of the earlier losses of the day intact. This softer close for the New York market which was trading solo for the day does little to inspire any confidence and one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set yesterday in New York and on Friday in London, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
Close: 03/05/2024 Close: 06/05/2024
JUL 3541 – 139 JUL 195.20 – 5.55
SEP 3740 – 147 SEP 194.15 – 4.95
NOV 3385 – 151 DEC 192.85 – 4.55
JAN 3280 – 153 MAR 192.40 – 4.35
MAR 3201 – 150 MAY 191.85 – 4.00
MAY 3144 – 141 JUL 191.40 – 3.50
JUL 3087 – 143 SEP 190.45 – 2.85
SEP 3022 – 143 DEC 189.25 – 2.10
