Coffee Market Report

The New York Arabica market completed 2024 at 69.81% higher than the outset, with this arabica futures market reaching levels last seen 47 years ago, in 1977, touching 347.35 usc/Lb., in December. The positive trajectory fuelled by several factors, primarily the perpetual cycle of deficit production concern, disruptions in shipping lane routes, the climatic disruptions in leading Brazil and Vietnam, prospective yield in 2024/25 and potential for 2025/26, as well as speculative sentiment across the geopolitical and economic macro. The London Robusta futures market has reflected historic highs in the year, reaching US$ 5,728.00 per Mt., in November, with the market gaining 71.59% at the start of 2024 to the close on Tuesday 31st December.

The new year begins with the latest Commitment of Traders report from the New York arabica coffee market register the shorter term in nature Managed Money sector increase in net long position by 2.82% within this market, over the week of trade leading up to Tuesday 24th December 2024; to register a new long position at 57,282 Lots. The longer term in nature, Index Fund sector of this market has decreased the net long position by 0.30% within the market, to register a new net long position of 49,507 Lots on the day.

Over the same week, there was an increase reflected in the net long position held by the Non-Commercial Speculative sector, by 9.42% within the market over the week of trade leading to Tuesday 24th December 2024: to register a new net long position of 41,753 lots, which is the equivalent of 11,836,790 bags. This net long position has most likely been marginally decreased following the period of mixed but overall softer trade that has since followed. The Commercial sector is conversely reported to hold an extensive net short position at 94,313 Lots on the day.

Within Brazil, the focus is with the new crop developing, and the varied state, commercial industry and independent forecasts that continue to come to the fore on the prospects of the new 2025 Brazil crop, which begins harvest in April in the Conilon robusta areas, and traditionally mid-year, in the main arabica growing areas.

The harvest in Vietnam is progressing, as farmers begin to build up new crop robusta coffee stocks. With just under a month left, ahead of the Tet New Year holidays, which will bring in the year of the Snake, traditionally one might anticipate selling activity to increase ahead of these celebrations, when farmers ordinarily use coffee sales to finance the preparations ahead of the nationally observed holidays. Vietnam robusta coffee farmers are relatively well financed in view of the value to be had in the London futures market, and as the export season picks up pace through these first few weeks of the new year, this factor may lead to a more measured release of coffee ahead of the celebrations. It is tradition for preparation ahead of Tet Lunar New Year to begin a week before the event itself and this is likely to see the otherwise exceedingly productive country’s commercial activity within Vietnam start to slow in the week leading up to 29th January this year.

The Indonesian government trade data from Sumatra, the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of November were 165,309 bags or 76.52% higher than the same month last year, at a total of 381,349 bags. This contributes to the islands cumulative robusta coffee exports for the first eight months of the current April 2024 to March 2025 coffee year to be 373,357 bags or 20.64% higher than the same period in the previous year, at a total of 2,182,235 bags. The April 2024 to March 2025 coffee year, which is around 85% robusta coffee and the balance arabica coffee, has been conservatively forecast to potentially reach a median of 10 million bags.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 11,113 bags on Tuesday, to register these stocks at 979,967 bags, with 98.26% of these certified stocks held in Europe, at a total of 962,873 bags and the remaining 1.74% being held in the USA at a total 17,094 Bags. Of this, a total 613,829 bags or 62.63% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 10.07% of these certified coffees, from Peru. The pending grading stocks were seen to decrease by 12,577 bags on the day, to register 54,575 bags pending grading on the day.

The March 2025 to March 2025 contract arbitrage between the London and New York markets widened on Tuesday, to register this at 98.62 Usc/Lb. This equates to 30.84% price discount for the London robusta coffee.

It was a firmer day on the commodity markets on Tuesday, ahead of the New Year holiday weekend. The US Dollar index ended 2024 7% higher year on year, with speculative interest looking towards the US Federal Reserve address in the coming week. The Cocoa, Corn, Soybean, Sugar, Wheat, Gold and Palladium markets ended the day on a firmer note, whilst the Coffee, Silver and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.253 Sterling, at 1.037 the Euro and with the US Dollar buying 6.184 Brazil Real.

The New York and London markets started the day on Tuesday trading on modest softer notes respectively before dropping back, pressured lower from the close on Monday. The markets tested the low of the day, to set a new range for both markets in where levels traded in negative territory for the remainder of the morning session. As the afternoon progressed and ahead of the New Year holiday, the markets encountered a degree of long liquidation, with book squaring and a stronger US Dollar influencing the direction of the markets. As the session progressed and the activity increased, albeit in modest volume both New York and London found support near to the lows of the day to recover from the earlier losses, muted buying activity prevented a breach into positive territory. The New York market settled on a softer note at the close with less than half of the earlier losses of the day intact, whilst the London market settled on a likewise softer note at the close with only some of the earlier losses of the day intact.

The London market ended the day on a negative note with 48.42% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note, with 14.12% of the earlier losses of the day intact. This softer close for the markets, reflected comparatively light book-squaring trade ahead of the New Year holidays. With another midweek holiday, these two sessions to complete the muted trading week, are anticipated to reflect modest activity as the commercial sector appear to be mostly still removed from the floor. One might therefore think that the markets may be due for a follow through steady start to early trade today, against the prices set on Tuesday, as follows:

LONDON ROBUSTA US$/MT                 NEW YORK USC/LB.
Close: 31/12/2024                                       Close: 31/12/2024

MAR    4875 – 46                                       MAR   319.75 – 1.25
MAY    4805 – 50                                       MAY   314.85 – 2.10
JUL      4727 – 49                                       JUL     308.45 – 3.30
SEP      4641 – 49                                       SEP     302.00 – 3.15
NOV    4563 – 47                                       DEC    289.35 – 2.85
JAN     4488 – 42                                        MAR  279.25 – 2.80
MAR   4426 – 34                                        MAY   271.55 – 2.20
MAY   4351 – 39                                        JUL      263.95 – 1.40