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 9.57% within this market over the week of trade leading up to Tuesday 4th June 2024; to register a new long position at 62,023 Lots. The longer term in nature, Index Fund sector of this market increased their net long position by 1.83% within the market, to register a new net long position of 50,135 Lots on the day.
Over the same week, the Non-Commercial Speculative increase their net long position by 6.30% within the market over the week of trade leading to Tuesday 4th June 2024: to register a new net long position of 46,543 lots, which is the equivalent of 13,194,734 bags. This net long position has most likely been marginally increased following the period of mixed but overall firmer trade that has since followed.
The Vietnam Customs Authority have reported that Vietnam’s coffee exports for the month of May have registered 47.80% lower from the previous month, at 1,322,633 bags. This number proving to be lower than 1.58 million bags initial estimate by the Vietnam Customs Authority for the month's coffee exports. The cumulative export performance for the first eight months of the current October 2023 to September 2024 coffee year in Vietnam that is the largest producer of robusta coffee, is reported to be 1,359,167 bags or 6.43% lower than the same period in the previous year, at a total 19,771,466 bags.
This lower export performance for Vietnam during the month of May, reflects the tight internal market conditions within this largest Robusta producing nation, as producers are relatively well financed through the firmer futures market structure and reticent sellers ahead of the new crop harvest to come. Weather conditions within Vietnam are continuing to be monitored, as rainfall levels have been lower than average throughout the month of May. Seasonal rainfall is soon expected to pick up and continue through to October, which will be a much welcome sign to producers and coffee market players alike. The forecast for the current coffee year is at a median estimate for the October 2023 to September 2024 Vietnam robusta coffee production to reach a total 27.50 million bags. One might comment that the potential for carry-over stocks into the next 2024/2025 year is likely to be limited, so long as Vietnam continues to be the dominant robusta coffee in northern hemisphere blends. Thus, the success of the development of the next Vietnam robusta crop is a factor that is being closely monitored by all market participants, for which the median estimate for production of the October 2024 to September 2025 Vietnam robusta coffee year is 27.15 million bags.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to remain unchanged yesterday, to register these stocks at 799,038 bags, with 99.30% of these certified stocks held in, Europe at a total of 793,449 bags and the remaining 0.70% being held in the USA at a total 5,589 Bags. Of this, a total 407,867 bags, or 51.04% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 15.92% of these certified coffees, originating from Honduras. The pending grading stocks were seen to increase by 13,794 bags; to register 40,677 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 29.26 Usc/Lb. This equates to 13.22% price discount for the London Robusta coffee.
It was a mixed day on the commodity markets yesterday, ahead of the next US Federal Reserve Policy meeting due to conclude on Wednesday this week. The general consensus in economist circles is that the US Federal Reserve is unlikely to make changes to the monetary policy this month, with most looking ahead to the third quarter of the year for the first in a cycle of interest rate cuts to come. This as further economic projections will guide decisions within a Presidential election year in this largest consumer economy. The Corn, Soybean, Gold, Silver and Platinum markets ended the day on a positive note, while the Coffee, Cocoa, Sugar, 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 1.076 the Euro and with the US Dollar buying 5.355 Brazil Real.
The New York and London markets started the day yesterday trading to the north of par on modest firmer notes respectively, the markets gained support quickly during the very early session under limited volumes of trade to set a ceiling for the day. The support was short lived as the markets encountered resistance to drop back from the early highs and trend through par and into negative territory to extend the losses from the close on Friday. A large degree of speculative long liquidation followed, to see both the New York and London markets drop and set a new low for the day, setting a large trading range on the day. As the afternoon progressed and the activity increased, the markets recovered some of the earlier losses whilst trading below par and in negative territory, the New York market settled on a softer note at the close with more than half of the earlier losses of the day intact, whilst the London market settled on a likewise softer note at the close with only some of the earlier losses of the day intact.
The London market ended the day on a negative note with 41.49% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note, with 59.13% of the earlier losses of the day intact. This follow through softer close for the markets, extending the losses from the close on Friday does little to inspire confidence, albeit that the markets recovered from the lows of the day during the late afternoon session and with first notice day in the prompt month in New York approaching in less than 8 days’ time, one might think that the markets are due for a follow through hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 4236 – 39 JUL 221.40 – 3.40
SEP 4082 – 46 SEP 222.00 – 2.90
NOV 3925 – 53 DEC 220.90 – 2.70
JAN 3759 – 61 MAR 219.75 – 2.65
MAR 3623 – 71 MAY 218.50 – 2.65
MAY 3543 – 81 JUL 217.45 – 2.60
JUL 3473 – 81 SEP 216.05 – 2.55
SEP 3381 – 81 DEC 214.45 – 2.35
