Coffee Market Report
The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector marginally increase their net long position by 8.30% within the market over the week of trade leading to Tuesday 12th November 2024: to register a new long position of 40,239 lots, which is the equivalent of 11,407,578 bags. This net long position has most likely been increased further 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 increase their net long position by 6.01% within the market over the week of trade leading to Tuesday 12th November 2024: to register a new net long position of 16,947 Lots which is the equivalent of 2,824,500 bags. This net long position has most likely been increased further following the period of overall firmer trade that has since followed.
The European Union Deforestation Regulation remains a key talking point within the markets, although the vote to delay the implementation of the regulation by 12 months was narrowly passed in the European Parliament, there remain uncertainty regarding the amendments to the certain sections of the regulation related to the creation of the ‘no-risk’ category. The regulation is not delayed as the amendments are contested and this delays the overall decision of the implementation date for EUDR. The last opportunity for discussions between the European Council and the European Parliament to reach an agreement on the way forward will be during the years’ final plenary session planned for the 16th to 19th December. The initial news released via public media following the vote last week, unfortunately misleading with technicalities on amendments that are included in the proposal to extend the implementation date, have held back the decision on the implementation date extension, and the sessions of last week left no conclusion on these proposed further amendments. The uncertainty surrounding compliance procedures for the seven named mostly imported crops and their derivatives, remains while there is no clear sign regarding the vote outcome and whether or not, this will take place ahead of the EUDR prevailing deadline for implementation, that remains 30th December 2024.
Tropical storm Sara has made landfall along the northern coastline of Honduras over the weekend, bringing with it heavy rainfall resulting in widespread flooding. The US National Hurricane Centre forecast between 380 – 630 mm of rain and northern regions of Honduras impacted by the heavy downpours destroyed infrastructure, forcing citizens to evacuate affected areas. Flooding reported in Costa Rica, Guatemala and river swells in Nicaragua. The storm has since been downgraded to a tropical depression, moving toward Mexico with more rain forecast to fall over the next few days. The lower lying areas in Central America’s expansive coffee districts has the seasonal 2024/25 harvest underway. Initial reports suggest that the greatest challenge following the severe weather sustained on the northern coastline is infrastructure damage due to the excess rains and flooding experienced.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 925 bags on Friday, to register these stocks at 872,664 bags, with 98.01 % of these certified stocks held in Europe at a total of 855,250 bags and the remaining 1.99% being held in the USA at a total 17,414 Bags. Of this, a total 451,915 bags or 51.78% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 14.42% of these certified coffees, from Nicaragua. The pending grading stocks were seen to increase by 3,298 bags on the day, to register 75,835 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 65.30 Usc/Lb. This equates to 23.17% price discount for the London robusta coffee.
It was a mixed but overall firmer day on the commodity markets on Friday, as macroeconomic uncertainty continues to influence the markets, with the US Dollar dropping back marginally against a basket of other currencies, a weaker Dollar is traditionally seen to be a bullish factor for commodities traded in other currencies. New York Arabica Coffee, Cocoa, Corn, Sugar, Soybean, Wheat and Palladium markets ended the day on a firm note, while the Gold, Silver and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.263 Sterling, at 1.054 the Euro and with the US Dollar buying 5.794 Brazil Real.
The New York and London markets started the day on Friday trading to the south of par on modest softer notes respectively. The markets traded either side of par for the remainder of the early morning session, before gaining momentum to track in a firmer direction in modest volume. The early support continued to set a firmer tone and in New York the arabica market touched thirteen-year market highs, while London followed suit at a more gradual pace. Brazil observing national holidays and the absence of volume on the selling side playing a part as both the commercial and speculative sector, need to either roll or close out positions on the prompt month with first notice day in the prompt month on Wednesday 20th November. As the afternoon progressed the gains in New York capped at the top with sellers returning to the floor/. Open interest registered 10,317 Lots at the close, to see the markets close on a steady note in London and in positive territory in New York, with half of the earlier gains of the day intact.
The London market ended the day near to unchanged with 4.40% of the earlier losses of the day intact, while the New York market ended on a positive note, with 58.16% of the earlier gains of the day intact. This mixed but overall firmer close for the markets, might see the markets set for a steady start to early trade today, against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 4773 – 4 DEC 281.80 + 2.85
MAR 4699 + 4 MAR 283.30 + 3.90
MAY 4637 + 14 MAY 281.45 + 3.70
JUL 4562 + 18 JUL 278.05 + 3.55
SEP 4487 + 20 SEP 274.00 + 3.55
NOV 4417 + 18 DEC 267.50 + 3.70
JAN 4338 + 12 MAR 261.60 + 3.80
MAR 4278 + 12 MAY 255.90 + 3.85
