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 in their net long position by 4.42% over the week of trade leading up to Tuesday 14th January 2025; to register a new long position at 60,469 Lots. The longer term in nature, Index Fund sector of this market decreased their net long position by 18.83% within the market, to register a new net long position of 39,345 Lots on the day.
Over the same week, the Non-Commercial Speculative sector increased their net long position by 17.60% within the market over the week of trade leading to Tuesday 14th January 2025: to register a new net long position of 48,799 lots, which is the equivalent of 13,834,300 bags. This net long position has most likely been increased further following the period of mixed but overall firmer trade that has since followed. The Commercial sector is reported to be holding 91,898 Lots net short position, 1.33% down from the 7th January 2025.
Many of the main coffee districts across the Brazil coffee belt have reported adequate rains thus far for the month of January, the average cumulative rainfall for the month of January 2025 leading up to 20th January 2024, is reported at 97.50 mm according to sources collectively reported by Refinitiv, versus the same period in the previous year reported at 137.85 mm. The new Conilon robusta crop readies to begin start harvest in a few months’ time, the arabica coffee crop develops, a continuation of the conducive summer typical pattern of rain and sun will be required. Weather forecasters are predicting sporadic light rainfall in some areas for the week ahead, with temperatures forecast to hold steady in the mid to high twenties over the same time.
The Ethiopian government announced this week that coffee exports had generated US$ 908 million in revenue during the first half of its fiscal year, recorded from July 2024 to December 2024. The report further illustrates that Africa’s largest producer and consumer of coffee exported 3.33 million bags of coffee during the second half of 2024, with major export destinations listed as Saudi Arabia, South Korea, the United States, Germany, and Japan. Developing coffee consumer countries of China, the United Arab Emirates and Sudan reportedly growing as key export destinations for Ethiopia. In comparison and during the previous first six months of the Ethiopian 2023 fiscal year the government reported coffee revenue of US$ 571 million from the export of 2.11 million bags of coffee.
Ethiopia will potentially produce 7.80 million bags arabica coffee for the current October 2024 to September 2025 coffee year. This country having a vibrant domestic consumption that it is estimated at approximately 3.50 million bags per annum, makes it a little more difficult to pin the actual production figures, and disappearance year on year. However, the USDA estimate that production this year is marginally larger than the previous crop. It is estimated that the country should be in a position to export approximately 4.50 million bags in the current October 2024 to September 2025 coffee year.
During the SIGEP World expo held in Italy this week, discussions were held regarding the investment of the coffee industry in digitisation and technology. In a panel discussion including representatives from the European Coffee Federation and the Speciality Coffee Association it was noted that 18% of B2B out of home transactions occur through digital channels, a growing trend in the more developed corners of the coffee industry, where consumers are starting to use innovative customer experiences such as online ordering and loyalty programmes to satisfy their need for a cup of joe. This also provides roasters with valuable consumer data, allowing for more accurate analytics on consumer behaviour and trends.
There are now six trading days for Vietnamese coffee trade, prior to the Eve of the Tet New Year holiday on 29th January 2025. The internal market is anticipated to be muted as the preparations for the celebrations pick up pace, ahead of the week of festivities to bring in the new Year of the Snake. Celebrations are scheduled to continue through to 2nd February, and a quite end of the month of January may be anticipated. This, to include a slowdown of almost all sectors in the economy over the celebratory time, to include logistical movements from the interior to port as well as export activity within the ports.
On the logistical front meanwhile, and with the geopolitical tensions showing some signs of de-escalation in the Middle East, there has been some discussion around the likelihood of Red Sea shipping lanes becoming available once again. Although not yet confirmed, the shipping route via the Suez Canal, is historically the primary thoroughfare connecting the Middle East and East Asia, to largest import consumer markets in Europe. This route has been unavailable since the escalation in the region nearly two years ago, and for major international shipping lines due to the heightened risk of vessel attacks throughout the time. The prospects that the route may soon become available, would bring some degree of relief in the least, for an improvement in inventory rotation within these countries, and for both exporters and importers alike, versus the alternative shipping lanes that otherwise add an estimated average of eight weeks to consignment shipment lead times, shipments routed south of the Horn of Africa, via the Cape of Good Hope.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday as the New York market closed for the day, to register these stocks at 982,377 bags, with 98.13% of these certified stocks held in Europe, at a total of 964,001 bags and the remaining 1.87% being held in the USA at a total 18,376 Bags. Of this, a total 630,633 bags or 64.19% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 9.76% of these certified coffees, from Peru. The pending grading stocks were seen to decrease by 21,141 bags on the day, to register 13,814 bags pending grading on the day.
Most commodity markets in the U.S.A. were closed yesterday for the Martin Luther King national holiday, which left the London Robusta Coffee market trading solo for the day.
The March 2025 to March 2025 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 95.07 Usc/Lb. This equates to 28.95% price discount for the London robusta coffee.
With most of the U.S.A. commodity markets off the field of player yesterday, the remaining open markets had a quiet day yesterday, but with the overall commodity index for these markets showing a degree of muscle, as the largest consumer country USA., inaugurated the President, and potentially a more economically conservative dispensation. The London Robusta Coffee, Gold and Silver markets ended the day on a firmer note, while the Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.223 Sterling, at 1.039 the Euro and with the US Dollar buying 6.032 Brazil Real.
The London market trading solo for the day yesterday, started the day trading on a modest softer note, before quickly gaining support to recover all of the early losses and trend in a firmer direction for the remainder of the session. The London market continued to trend in a firmer direction, buoyed by support throughout the day. As the afternoon progressed the market continued to trend firmer, with buy stops being triggered along the way in a relatively modest volume session. The London market trading solo on the day hit a ceiling very late in the session to limit the day’s gains and see the market settle on a very firm note with most of the earlier gains of the day intact at the close.
The London market ended the day yesterday on a very positive note with 88.96% of the earlier gains of the day intact, while the New York market ended the day on Friday on a likewise positive note, with 22.65% of the earlier gains of the day intact. This firmer close for the London market trading solo for the day the day, might assist to indicate some degree of direction and provide support to see the markets set for a follow through steady start to early trade today, against the prices set in London yesterday and New York on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
Close: 20/01/2025 Close: 17/01/2025
MAR 5143 + 137 MAR 328.35 + 1.20
MAY 5090 + 128 MAY 324.60 + 1.45
JUL 5005 + 124 JUL 318.25 + 1.70
SEP 4911 + 121 SEP 309.45 + 1.50
NOV 4817 + 114 DEC 294.95 + 1.35
JAN 4732 + 109 MAR 284.90 + 1.35
MAR 4654 + 109 MAY 275.65 + 1.25
MAY 4579 + 109 JUL 265.65 + 1.05
