Coffee Market Report

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector decrease their net long position by 5.98% within the market over the week of trade leading to Tuesday 16th July 2024: to register a new long position of 47,856 lots, which is the equivalent of 13,566,964 bags. This net long position has most likely been decreased further following the period of mixed but overall softer trade that has since followed.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money Sector marginally decrease their net long position by 1.55% within the market over the week of trade leading to Tuesday 16thJuly 2024: to register a new net long position of 37,813 Lots which is the equivalent of 6,302,167 bags. This net long position has most likely been decreased following the period of mixed but overall softer sideways trade that has since followed.

Within the Coffee futures terminal markets meanwhile, the inversion in New York is showing signs that there may be a correction in structure, albeit narrow. This as the spread between the front months begins to narrow. Should this trend continue, this may be received with some relief for holders of inventory along the arabica coffee supply chain. It has been an extended period of an extraordinarily wide and inverted spread between the front months on the futures markets. The traditional structure of premiums that would apply for the forward delivery months of the futures market, traditionally provide some liquidity which is required to allow the industry, from origin mills and exporters through to consumer roasters, to hedge, store, and finance to some extent the seasonal coffee crops that are harvested within four to five months of the year, and are required to be stored, financed, and shipped to fuel consumer markets over twelve months of the year.

The Certified washed arabica coffee stocks held against the New York arabica market were seen to remain unchanged on Friday, to register these stocks at 818,230 bags, with 98.32% of these certified stocks held in, Europe at a total of 804,512 bags and the remaining 1.68% being held in the USA at a total 13,718 Bags. Of this, a total 412,883 bags, or 50.46% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 15.37% of these certified coffees, from Honduras. The pending grading stocks were seen to increase by 7,725 bags on the day; to register 19,298 bags pending grading on the day.

The September 2024 to September 2024 contract arbitrage between the London and New York markets narrowed on Friday, to register this at 32.72 Usc/Lb. This equates to 13.74% price discount for the London robusta coffee.

It was a softer day on the commodity markets on Friday, with the US Dollar gaining ground against a basket of other currencies, a firmer Dollar is traditionally seen to be a bearish factor for commodities traded in other currencies. The altered landscape in the USA political arena might see heightened volatility in the commodity markets to start the week. The London Robusta Coffee and Wheat markets ended the day on a firm note, while the New York Arabica Coffee, Cocoa, Corn, Sugar, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.291 Sterling, at 1.089 the Euro and with the US Dollar buying 5.611 Brazil Real.

The London and New York markets started the day on Friday trading to the north of par on modest firmer notes respectively, in light volumes of trade for the early session. A continuation through the early morning session with the markets oscillating either side of par before attracting some degree of selling pressure to see both the New York and London markets set on a softer path for the remainder of morning session. As the afternoon progressed the markets, with some degree of speculative long liquidation pressure tracked lower. The New York market traded around the lows of the day for the mid-afternoon session before finding support to recover most of the earlier losses during the late afternoon session to settle on a softer note at the close. The London market gained support at the lows of the day to recover all of the losses and trend trend firmer into the close, the London market was seen to rally late in the day and the market settled near to the highs of the day with most of the earlier gains of the day intact.

The London market ended the day on a positive note with 89.47% of the earlier gains of the day intact, while the New York market ended on a negative note, with 36.99% of the earlier losses of the day intact. This mixed close for the markets, with the London market settling near to the highs of the day and the New York market recovering most of the earlier losses of the day during the late afternoon session, might see the markets set for a follow through hesitant steady start to early trade today, against the prices set on Friday, as follows:

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

SEP     4530 + 51                                        SEP     238.20 – 2.70
NOV   4355 + 38                                        DEC    236.70 – 2.65
JAN    4164 + 25                                        MAR   234.95 – 2.55
MAR  4002 + 7                                          MAY   231.95 – 2.80
MAY  3890 – 6                                          JUL     229.25 – 2.90
JUL    3797 – 8                                          SEP     226.70 – 2.95
SEP    3719 – 6                                          DEC    224.10 – 3.00
NOV  3662 – 6                                          MAR   221.40 – 3.05