Coffee Market Report
The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector marginally decrease their net long position by 1.72% within the market over the week of trade leading to Tuesday 29th. October 2024: to register a new long position of 38,064 lots, which is the equivalent of 10,790,975 bags. This net long position has most likely been decreased further following the period of overall sideways 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 decrease their net long position by 17.14% within the market over the week of trade leading to Tuesday 29th. October 2024: to register a new net long position of 19,284 Lots which is the equivalent of 3,214,000 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 Coffee Exporters Association in Brazil Cecafé have reported preliminary export data for the month of October to report that the countries green coffee exports were 24.54% higher than the same month last year, to total 4.38 million bags, this number made up of 3.43 million bags of arabica coffee and 908,000 bags of Conilon robusta coffee. The official export figure for October 2024 will be released by Cecafé in the weeks ahead, to more accurately reflect these figures.
The weather reports in Brazil continue to remain positive through most coffee growing areas, and the cumulative rainfall for the month of October higher than the previous year, providing much needed soil moisture following the dry winter months. This rainfall is well received; however, one might comment that the drier than normal weather experienced leading up to this point may have already had an impact on the development of the 2025/2026 crop to come. Weather forecasters are anticipating further rain to come in the week ahead, which will be useful to assist with the crop set for the next Brazil 2025/26 biennially bearing coffee crop, given the climatic challenges experienced to this point.
Tropical Storm Trami moved through the coffee growing areas of the Vietnam Central Highlands last week, bringing with it heavy rainfall. The intensified rainfall is not indicated to have caused damage, high winds leading to only minor disruptions as farmers harvest the new October 2024 to September 2025 coffee crop. There is some attention to be drawn to the upcoming weather forecasts, rainfall should seasonally come to an end soon to allow harvest and drying processes to proceed uninterrupted.
Chinese coffee chain, Luckin Coffee has reported positive news in a 41.40% increase in net revenue from the same time last year, as the largest coffee chain in China, evaluates expansion opportunities in the United States. During the third quarter of this year, the coffee chain opened 1,382 new stores in China, representing a 6.90% growth quarter on quarter. The report states that this brings the neck-on-neck challenger to Starbucks in the Chinese market to a total store count to 21,343 stores. One might comment that this is a fair representation of the potential for growth and coffee consumer trends in relatively new coffee consumer markets, within the worldwide coffee producer sector, China a good example. The latest USDA report indicates domestic coffee consumption in this country to be still at a relatively low 5 million bags of coffee, although posting growth from a low base by an estimated 14.75% year on year. This internal consumption is mainly comprised of coffee produced locally within China, and less than 40% of the total consumption according to the USDA, reported to be imported green coffee.
The markets continue to wait in anticipation for the European Union’s EUDR parliamentary vote, due to take place next week, on the potential for an official delay decision on the European Union's Deforestation Regulation (EUDR), which was initially set to be enforced for all imports to the EU of coffee, cocoa, cattle, timber, oil palm, soya, rubber, at 30th December 2024. This delay decision has been agreed by the European Council but awaits final approval, that will be voted by EU Parliament on the 13th November 2024. The prospects of a delay decision will allow another twelve months for all supply chain actors and European consumer markets, to align on actionable instruments and practical solutions for the implementation of these regulations, by 30th December 2025. The European Union is collectively the largest coffee consumer bloc, put at an annualised 53.50 million bags or 31.20% of the world’s coffee production in import absorption.
The European Union as a combined cumulative coffee consumer bloc, accounts for an average 53.50 million bags, or 31.20% of the world's coffee production in import absorption
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,365 bags on Friday, to register these stocks at 856,423 bags, with 97.89% of these certified stocks held in Europe at a total of 838,369 and the remaining 2.11% being held in the USA at a total 18,054 Bags. Of this, a total 415,926 or 48.57% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 15.84% of these certified coffees, from Nicaragua. The pending grading stocks were seen to decrease by 8,534 bags on the day, to register 96,282 bags pending grading on the day.
The December 2024 to January 2025 contract arbitrage between the New York and London markets widened on Friday, to register this at 48.86 Usc/Lb. This equates to 20.11% price discount for the London robusta coffee.
It was a mixed but overall softer day on the commodity markets on Friday, with the US Dollar index firmer on the day, traditionally a bearish factor for commodities traded in other currencies ahead of the US Presidential Elections due to be held tomorrow. The Cocoa, Corn and Platinum markets ended the day on a firm note, while the Coffee, Sugar, Soybean, Wheat, Gold, Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.299 Sterling, at 1.090 the Euro and with the US Dollar buying 5.868 Brazil Real.
The New York and London markets started the day on Friday pressured lower during the early session, dropping below par to trend in a softer direction before finding support early to reverse the trend and gain momentum setting a new high for the day. The markets dropped back from the early high to encounter resistance and drop lower to be seen to project on a softer trajectory to see the markets move lower during the remainder of the morning session. As the afternoon progressed the volume increased to contribute to the day’s direction with speculative selling on the New York floor assisting to trigger stops along the way, with open interest on the prompt month reported at 73,348 lots ahead of first notice day in less than three weeks’ time. The London market followed suit, and the markets continued to project lower with a large degree of technical and speculative long liquidation to contribute toward the losses for the day’s trade. The selling activity started to wane toward the end of the days’ trade, to see the markets marginally recover some of the earlier losses of the day, in fair volumes of trade for both the New York and London markets, to settle near to the lows of the day, on a soft note at the close.
The London market ended the day on a negative note with 81.82% of the earlier losses of the day intact, while the New York market ended on a likewise negative note, with 64.13% of the earlier losses of the day intact. This follow through softer close, with both the New York and London markets settling near to the lows of the day with most of the earlier losses intact, might lead one to think that the markets are due for little better than a hesitant start to early trade today, against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 4279 – 90 DEC 242.95 – 2.95
MAR 4208 – 73 MAR 242.40 – 3.10
MAY 4150 – 66 MAY 241.35 – 3.10
JUL 4075 – 70 JUL 239.20 – 2.95
SEP 4010 – 71 SEP 236.45 – 2.85
NOV 3962 – 71 DEC 231.95 – 2.70
JAN 3895 – 71 MAR 228.15 – 2.85
MAR 3836 – 71 MAY 224.85 – 3.10
