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 10.55% within this market over the week of trade leading up to Tuesday 20th August 2024; to register a new long position at 57,468 Lots. The longer term in nature, Index Fund sector of this market increase their net long position by 2.38% within the market, to register a new net long position of 49,168 Lots on the day.
Over the same week, the Non-Commercial Speculative increase their net long position by 11.59% within the market over the week of trade leading to Tuesday 20th August 2024: to register a new net long position of 43,474 lots, which is the equivalent of 12,324,686 bags. This net long position has most likely been little changed following the period of mixed trade that has since followed.
Weather conditions in Vietnam have shown signs of improvement following a drier than normal start to the rain season. This improved rainfall is necessary for the development of the new crop, which is due to start harvest at the end of the rain season around October/November each year and should start to flow to consumer markets at the outset of 2025. With forecasts generally indicating a lower than initially anticipated production to come at 27 million bags.
The historical Brazil weather data and soil moisture levels through the traditional winter months of May through to July have been reported by sources accumulated by Refinitiv, to be on average 66.10mm below the levels at the same time last year, at a total of 215.50mm in the top 0-1.6m of soil. The arrival of spring rain seasons this year will be closely monitored by all market participants across the vast Brazil coffee growing areas. Weather forecasters are predicting warm temperatures and lower than normal rainfall until mid-September thereafter seasonal rainfall should begin to pick up and assist to improve soil moisture levels before the summer heat season starts.
The mainstream northern hemisphere coffee consumer markets are returning from their traditionally slower summer holiday season. This while privately held arabica inventory levels in these traditional consumer markets are low despite the surge in monthly reported exports from the largest producer and exporter to consumer markets, Brazil. Concerns are being voiced regarding the macro-economic factors that could influence northern hemisphere mature consumer markets, and a continuation of economic pressure in the wake of the related global inflation environment. There are strong signals that the worlds’ largest economy, USA may soon begin to turn the tide on the higher interest rate cycle which could potentially lead the way for other northern hemisphere consumer markets who may follow suite, to provide some relief to consumers.
The London Robusta Market was closed yesterday, as the UK celebrated their Summer Bank Holiday, leaving the New York market to trade solo for a shortened day of trade.
The Certified washed arabica coffee stocks held against the New York arabica market were seen to decrease by 420 bags yesterday, to register these stocks at 843,725 bags, with 98.15% of these certified stocks held in, Europe at a total of 828,082 bags and the remaining 1.85% being held in the USA at a total 15,643 Bags. Of this, a total 408,025 bags, or 48.36% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 13.69% of these certified coffees, from Honduras. The pending grading stocks were seen to remain unchanged; to register 28,585 bags pending grading on the day.
The November 2024 to December 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 35.78 Usc/Lb. This equates to 14.33% price discount for the London robusta coffee.
It was an overall firmer day on the commodity markets yesterday, with the expectation of interest rates cuts to come during next month’s US Federal Reserve monetary policy meeting. The Coffee, Cocoa, Sugar, Soybean, Gold, Silver and Platinum markets ended the day on a firmer note, the Palladium market remained unchanged yesterday, while the Corn and Wheat markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.319 Sterling, at 1.117 the Euro and with the US Dollar buying 5.498 Brazil Real.
The New York market trading solo for a shortened day yesterday started the day trading close to par on a modest softer note, the New York market quickly attracted a degree of buying support to see the market trend firmer and into positive territory throughout the early morning session. The New York market was seen to hit a continue a firmer path for the remainder of the session. As the afternoon progressed the market gained support, albeit in modest volumes of trade. This saw the market continue a firmer path before being capped late in the day to encounter some degree of resistance near to the highs of the day, to see the New York market settle on a firmer note at the close, with most of the earlier gains of the day intact
The London market ended the day on Friday, on a positive note with 91.56% of the earlier gains of the day intact, while the New York market ended the day yesterday, on a positive note, with 75.81% of the earlier gains of the day intact. This follow through firmer close for the New York market trading solo on the day, might assist to inspire some degree of confidence, with the market maintaining most of the earlier losses of the day, one might think that the markets are due for a follow through steady start to early trade today, against the prices set on Friday in London and yesterday in New York, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
Close: 23/08/2024 Close: 26/08/2024
SEP 5128 + 225 DEC 249.65 + 2.35
NOV 4715 + 141 MAR 247.15 + 2.35
JAN 4513 + 133 MAY 244.80 + 2.20
MAR 4340 + 119 JUL 242.15 + 1.95
MAY 4220 + 114 SEP 239.30 + 1.60
JUL 4115 + 110 DEC 236.15 + 1.30
SEP 4043 + 112 MAR 233.00 + 1.00
NOV 3980 + 110 MAY 230.15 + 0.90
