Coffee Market Report
The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increase their net long position by 3.43% within the market over the week of trade leading to Tuesday 21st. May 2024: to register a new long position of 41,377 lots, which is the equivalent of 11,730,196 bags. This net long position has most likely been increased further following the period of mixed but overall firmer trade that has since followed.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money Sector increase their net long position by 8.69% within the market over the week of trade leading to Tuesday 21st. May 2024: to register a new net long position of 21,597 Lots which is the equivalent of 3,599,500 bags. This net long position has most likely been increased further following the period of mixed but overall firmer trade that has since followed.
The respected U.S. Department of Agriculture Global Agricultural Network USDA have reported their forecast for the exclusively arabica coffee crop from Honduras for the present October 2023 to September 2024 coffee year, to reach an overall 5,500,000 bags, or 0.36% lower than the previous coffee production year October 2022 to September 2023 that is reported at 5,520,000 bags. The report cites a higher incidence of leaf rust and other diseases which are expected to reduce coffee production directly by reducing yields as well as economic factors that could continue to limit access to finance needed to fund production inputs such as fertilizers, as well as challenges related to the shortage of labour during key harvest activities.
The same report has forecast that the new crop to come from Honduras for the forthcoming October 2024 to September 2025 coffee year, is anticipated to remain stable from the current year. The new arabica crop which is due to start harvest toward the end of the year, is forecast to come in at 5,500,000 bags. Of this new crop to come, the forecast is that Honduras will export 5,300,000 bags or 6.00% more than the current year. Local consumption is reportedly growing by around 2% annually, albeit from a low base. The sector made up of a combination of imported soluble products as well as local and imported roast and ground coffee products, which is forecast by the USDA to be in the region of 383,000 bags during the current 23/24 coffee year.
The USA will observe Memorial Day today, and the New York Arabica market is closed accordingly, whilst the UK will celebrate their Spring Bank Holiday, and the London Robusta market closed for the day.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to decrease by 30 bags on Friday, to register these stocks at 774,686 bags, with 99.29% of these certified stocks being held in, Europe at a total of 769,097 bags and the remaining 0.71% being held in the USA at a total 5,589 Bags. Of this, a total 384,210 bags, or 49.60% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 17.06% of these certified coffees, originating from Honduras. The pending grading stocks were seen to increase by 1,780 bags; to register 23,980 bags pending grading on the day.
The July 2024 to July 2024 contract arbitrage between the London and New York markets narrowed on Friday, to register this at 41.71 Usc/Lb. This equates to 19.11% price discount for the London Robusta coffee.
It was a firmer day overall on the commodity markets on Friday, with minutes from the US Federal Reserve’s latest policy meeting indicating that the Central Bank may hold off on interest rate cuts for longer than expected as inflation takes some time to cool. The Coffee, Cocoa, Corn, Soybean, Sugar, Gold, Silver and Platinum markets ended the day on a positive note, while the Wheat and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.274 Sterling, at 1.085 the Euro and with the US Dollar buying 5.170 Brazil Real.
The New York market started the day on Friday trading on a modest firmer note, while the London market was pressured lower during the early morning session. Both markets attracted support during the early morning session to track mildly firmer for the remainder of the morning session before gaining momentum, as support was seen to build during the late morning session. As the afternoon progressed, the New York market continued to trade north of par, albeit that the mid-afternoon session saw the market take a marginally softer track. The London market followed suit to likewise trend in a firmer direction for the remainder of the day’s session. The New York market hit a ceiling late in the day to limit the gains for the day with sellers returning to the floor. The New York market dropped back from the highs late in the day, to settle on a firmer note at the close. The London market followed suit, to continue to trend firmer buoyed by support within the market, to encounter resistance late in the day and settle on a firmer note at the close.
The London market ended the day on a positive note with 82.95% 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 provide some degree of support and direction to the open tomorrow, albeit that both the New York and the London markets fell back from the highs of the day a choppy session in a comparatively narrow range, as the markets are closed today due to the Memorial Day Holiday in New York and the Spring Bank Holiday in London, against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 3892 + 73 JUL 218.25 + 2.60
SEP 3806 + 67 SEP 217.35 + 2.55
NOV 3709 + 65 DEC 216.10 + 2.50
JAN 3616 + 68 MAR 215.25 + 2.40
MAR 3532 + 69 MAY 214.40 + 2.35
MAY 3474 + 68 JUL 213.75 + 2.35
JUL 3408 + 67 SEP 213.05 + 2.35
SEP 3316 + 67 DEC 212.50 + 2.35
