The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market raise their net long position within this market by 19.76% over the week of trade leading up to Tuesday 7th June; to register a new net long position 39,969 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 7.78%, to register a net long position of 46,842 Lots on the day.
Over the same week, the Non-Commercial Speculative sector raised their net long position by 9.23% within the market over the week of trade leading up to Tuesday 7th June: to register a net long position of 25,618 lots, which is the equivalent of 7,262,589 bags. This net long position has most likely been little changed following the period of mixed but overall marginal softer trade that has since followed.
The Brazil government have reported preliminary data that illustrates the country’s green coffee exports for the month of May were 25.06% lower than the same month last year, at a total of 2.37 million bags. These figures are reported versus the Brazil bumper crop, that is estimated to have come in at a record 72 million bags in the July 2020 to June 2021 coffee year.
The latest round of economic data released in the U.S.A. on Friday, relating to the world’s leading economy’s higher than anticipated inflation numbers, had a notable influence on the markets in general terms yesterday. This led to a strengthening of the US Dollar against a basket of currencies, and the related loss in value in the Brazil Real, which depreciated by 2.99% on the day and settled around the low against the US Dollar, on the day. The Brazil Real weakness to the US Dollar can traditionally encourage increased selling activity within the interior of Brazil, as returns to producers are increased in Brazil Real terms, which is likely to have had some impact upon the direction of the New York futures markets yesterday, with the new Brazil harvest, currently underway, and this largest coffee producer’s selling activity, likely to increase and a factor that may continue to provide direction to the markets in the short term.
The June full moon meanwhile, has passed over the Brazil coffee belt this morning and temperatures for the rest of the week drawn from various reputable weather sources, indicate that minimum temperatures are forecast to remain within the lower teens in degrees Celsius, through to mid next week.
The July 2022 to July 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 130.86 usc/Lb. This equates to 58.59% price discount for the London Robusta coffee market. This wide arbitrage may be viewed by price sensitive roasters as an attractive alternative discount for Robusta against the comparatively higher value arabica coffee.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,550 bags yesterday, to register these stocks at 1,012,750 bags, with 95.44% of these certified stocks being held in Europe at a total of 966,541 bags and the remaining 4.56% being held in the USA at a total 46,209. Of this, a total 498,951 bags, or 49.27% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 41.59% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 11,049 bags pending grading on the day.
It was a softer day on the commodity markets yesterday, as the inflation data released on Friday, and the overall commodity sector registered a softer day, as the US Dollar continued to climb to against a basket of other currencies. The volatility in the Oil and Energy markets continues, Wheat finished the day on a firmer note, while the Coffee, Sugar, Cocoa, Corn, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.217 Sterling, at 1.042 the Euro and with the US Dollar buying 5.115 Brazil Real.
The New York market started the day yesterday trading on a softer note, while the London market started the day trading on a modest near to par firmer note at the open. Both the New York and London markets quickly attracted selling pressure to see the markets trend in a softer direction. As the afternoon progressed the New York and London markets would continue to project in a negative direction which would see the markets soon hit a floor for the day, pressured by long liquidation selling. The markets rebounded from the lows of the day during the late afternoon session to see the New York market recover almost half of the earlier losses of the day and settle on a buoyant note at the close, while the London market followed suit, to also recover some of the earlier losses of the day and settle within the middle of the day’s range, on the close.
The London market ended the day a negative note with 64.41% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 55.55% of the earlier losses of the day intact. This follow through softer close for the markets does little to inspire confidence, albeit that the markets recovered some of the earlier losses of the day and with first notice day on the prompt month in New York approaching on the 22nd of June, one might think that the markets are due for a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 2039 – 38 JUL 223.35 – 5.55
SEP 2055 – 40 SEP 223.45 – 5.35
NOV 2052 – 35 DEC 223.05 – 5.20
JAN 2043 – 33 MAR 222.05 – 5.05
MAR 2038 – 31 MAY 220.75 – 5.05
MAY 2033 – 32 JUL 219.00 – 5.05
JUL 2030 – 32 SEP 216.90 – 5.00
SEP 2023 – 32 DEC 215.00 – 4.90