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 13.57% within the market over the week of trade leading to Tuesday 9th July 2024: to register a new long position of 50,902 lots, which is the equivalent of 14,430,491 bags. This net long position has most likely been increased further following the period of mixed but overall firmer trade that has since followed. This marks the largest net long position held since the 15th February 2022 when the Non-Commercial speculative sector of the market held a net long position of 53,279 lots and may be seen a bullish indicator for the market in the short to medium term. Collectively, the Non-Commercial and Managed Money sector held the equivalent of 33.38 million bags in this washed arabica futures market nett long, this remarkable volume not held in combination since February 2022 and is the equivalent of around 75% of annual washed arabica production.
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 20.99% within the market over the week of trade leading to Tuesday 2nd July 2024: to register a new net long position of 38,410 Lots which is the equivalent of 6,401,667 bags. This net long position has most likely been increased further following the period of mixed but overall firmer trade that has since followed.
Within Brazil, the harvest has reached 66% and is continuing at a faster pace than last season which was reported at 59% for the same time. It is expected that the harvest will continue to progress, as weather forecasts remain conducive, with no expected risk of cooler than usual temperatures over the days to come. The updated crop forecasts coming to the fore indicate that the crop may be smaller than initially anticipated. Although the biennial nature of Brazil production has been less significant in recent years, this July 2024 to June 2025 harvest was ahead of time, forecast to come in at between 68 to 70 million bags. As the harvest progresses however and the lower intake of bolder bean coffee becomes increasingly evident, these forecasts are being trimmed back by around 2 to 3 million bags. Although this is still a sizeable harvest that is by now, reaching peak in the arabica areas and close to completion in the robusta areas, the drawdown of producer country and consumer market inventories over the past few years, will require a sizeable Brazil crop this year, to fuel domestic demand as well as exports to consumer markets for the next twelve-month seasonal coffee year. This while the primary washed arabica producer bloc – Colombia, Mexico, Honduras and the rest of Central America will see new crop harvests set to start toward the latter end of this calendar year. Despite the latest updated coffee export figures that registered at record-breaking exports to the world in June, from a logistics standpoint the Brazilian key export ports, Santos and Vitoria continue to report container and vessel availability constraints, shipping route alterations resulting in extended shipment delays.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to decrease by 3,535 bags on Friday, to register these stocks at 805,366 bags, with 98.80% of these certified stocks held in, Europe at a total of 795,773 bags and the remaining 1.20% being held in the USA at a total 9,593 Bags. Of this, a total 410,849 bags, or 51.01% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 15.75% of these certified coffees, originating from Honduras. The pending grading stocks were seen to increase by 1,425 bags yesterday; to register 23,264 bags pending grading on the day.
The September 2024 to September 2024 contract arbitrage between the London and New York markets widened on Friday, to register this at 39.33 Usc/Lb. This equates to 15.81% price discount for the London Robusta coffee.
It was a softer day on the commodity markets on Friday, in some degree of consolidation post the general gains in the commodity market late in the week after better-than-expected CPI data increased bets that interest rate cuts will soon be a reality in the world’s largest economy. The Coffee and Corn markets ended the day on a firm note, the Gold market remained unchanged on the day, while the Cocoa, Sugar, Soybean, Wheat, Silver, Platinum and Palladium markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.297 Sterling, at 1.089 the Euro and with the US Dollar buying 5.429 Brazil Real.
The New York and London markets started the day on Friday trading on a firmer note. The London market quickly gained momentum gapping higher at the outset of the early morning session, in limited volume. The New York market was slower to react and having set a higher level, traded either side of par in a comparatively quiet volume morning. Both the New York and London markets dropped back from the earlier highs to trend below par and set a new low for the day during the mid-morning session, before finding support to rebound from the lows of the day. The arrival of the America’s at the start of their business day pushed New York higher, triggering buy stops along the way to accentuate the gains for the day, this assisted to trigger speculative short covering which saw the New York market gain ground quickly throughout the afternoon session, with the London market following suit to make gains throughout the afternoon session. The New York market continued the upward momentum before being capped very late in the day, to see the market marginally drop back and settle on a very firm note at the close. The London market followed suit to settle on a firm note at the close, with most of the earlier gains of the day intact.
The London market ended the day on a positive note with 66.13% of the earlier gains of the day intact, while the New York market ended on a likewise positive note, with 80.41% of the earlier gains of the day intact. This follow through firmer close for the markets, might indicate some degree of support and direction with both the New York and London market gaining momentum throughout the session to settle near to the highs of the day albeit under modest volumes of trade. One might therefore think that the markets may be pressured for a steady start to early trade today, against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
SEP 4617 + 41 SEP 248.75 + 3.90
NOV 4441 + 44 DEC 246.80 + 4.15
JAN 4250 + 48 MAR 244.55 + 4.40
MAR 4079 + 35 MAY 241.70 + 4.55
MAY 3940 + 13 JUL 238.85 + 4.60
JUL 3813 – 13 SEP 235.85 + 4.85
SEP 3726 – 13 DEC 232.80 + 5.30
NOV 3672 – 13 MAR 229.65 + 5.50
