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 2.38% within the market over the week of trade leading to Tuesday 5th November 2024: to register a new long position of 37,158 lots, which is the equivalent of 10,534,128 bags. This net long position has most likely been little changed following the period of overall firmer 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 17.10% within the market over the week of trade leading to Tuesday 5th November 2024: to register a new net long position of 15,986 Lots which is the equivalent of 2,664,333 bags. This net long position has most likely been little changed following the period of mixed but overall firmer sideways trade that has since followed.
Typhoon Yinxing, is moving toward central Vietnam over the next 24 hours after passing through the Philippines, leaving a trail of destruction due to strong winds and heavy rainfall. The latest weather reports indicate that the storm may bring with it high wind and heavy rains across parts of the world’s largest robusta producing country. It is still too early to anticipate the impact on the coffee growing areas, although November is traditionally a drier month suitable for harvest and cherry drying conditions, and rain may interrupt the harvest activities that are underway. The world’s largest Robusta producer is currently harvesting the new October 2024 to September 2025 mainly Robusta coffee crop, with limited carryover inventory held in country from the previous 2023/24 crop. The current coffee year that is predominantly robusta production and Vietnam, the leading robusta producer and exporter to consumer markets, is forecast to have potential to reach an estimated 28 million bags, of which 95% is robusta coffee. While there has been an observed improvement in farming husbandry, that would indicate improved yields to come, it is possible that excessively warm climatic conditions reported in the earlier stages of this 2024/25 cherry development phase, could see some of the higher early estimates by independent crop forecasters reviewed, as the harvest progresses.
The main coffee districts within Brazil continue to report good rainfall, with forecasts for these rains to continue into the week ahead. The increase in soil moisture following a dry winter period, is a welcome sign to producers and vital for the development of the coffee crop over the weeks ahead.
The coffee industry will be looking to the European Union’s EUDR parliamentary vote, due to take place later this week, on the potential for an official delay decision on the European Union's Deforestation Regulation (EUDR). Should the vote be in favour of the delay, this will allow for another twelve months for all supply chain actors and European consumers to align on actionable instruments and practical solutions for the implementation of these regulations, by 30th December 2025 for imports of coffee, cocoa, cattle, timber, oil palm, soya and rubber. The positive news of a delay is likely to be welcomed by supply chain actors, despite varying levels of preparedness, the substantive evidence required to meet the EU regulation and reporting tools volunteered by the regulators are not yet available thus compliance mechanisms as volunteered by the European Union regulators ahead of implementation of the EUDR., have not yet been communicated.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,325 bags on Friday, to register these stocks at 852,638 bags, with 97.88% of these certified stocks held in Europe at a total of 834,584 bags and the remaining 2.12% being held in the USA at a total 18,054 Bags. Of this, a total 435,283 bags or 51.05% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 14.69% of these certified coffees, from Nicaragua. The pending grading stocks were seen to increase by 22,512 bags on the day, to register 117,767 bags pending grading on the day.
The December 2024 to January 2025 contract arbitrage between the New York and London markets narrowed on Friday, to register this at 54.86 Usc/Lb. This equates to 21.65% price discount for the London robusta coffee.
It was a softer day overall on the commodity markets on Friday, with the US Dollar strengthening by 0.60% against a basket of other currencies, while investors looking to the largest consumer nation USA, come to terms with the implication of a new political arena in this country in 2025. The Corn, Soybean and Wheat markets ended the day on a firm note, while the Coffee, Cocoa, Sugar, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.290 Sterling, at 1.071 the Euro and with the US Dollar buying 5.738 Brazil Real.
The New York and London markets started the day on Friday on a softer note. The New York market finding support in early trade to move into positive territory, the London market continued on a softer path. The buying support within the New York market was short lived, and sellers appeared to absorb the buyers, to see the trend move in softer direction for the remainder of the early morning session. The markets continued a softer trajectory with first notice day in the arabica markets, a softer Brazil Real and overarching macroeconomics leaning in on the day. The arrival of the America’s reflected increased volume and a continuation of speculative selling on the New York floor assisting to trigger stops along the way. The London market followed suit, triggering stops as speculative long liquidation accentuated the negative moves in both markets. New York registered a hefty 53,296 lots open interest ahead of first notice day in New York which approaches on the 20th of November 2024. The selling activity started to wane toward the end of the days’ trade, the markets marginally recover some of the earlier losses of the day, in a heavy volume day a softer close for both the New York and London markets, to settle near to the lows of the day.
The London market ended the day on a negative note with 94.02% of the earlier losses of the day intact, while the New York market ended on a likewise negative note, with 92.16% of the earlier losses of the day intact. The close, with both the New York and London markets settling near to the lows of the day with most of the earlier losses intact, could attract a degree of buyer activity although this may be muted, with first notice day against the prompt month in New York in less than 7 trading days’ time, and the close on Friday with prices set, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 4376 – 110 DEC 253.35 – 7.05
MAR 4318 – 106 MAR 253.10 – 6.65
MAY 4263 – 102 MAY 251.80 – 6.55
JUL 4183 – 99 JUL 249.85 – 6.45
SEP 4111 – 97 SEP 245.85 – 6.60
NOV 4055 – 96 DEC 239.90 – 7.00
JAN 3990 – 96 MAR 234.70 – 7.20
MAR 3931 – 96 MAY 230.35 – 7.30
