The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector decrease their net long position by 78.61% within the market over the week of trade leading to Tuesday 18th. October 2022:  to register a net long position of 5,106 lots, which is the equivalent of 1,447,528 bags. This net long position has most likely been decreased further following the period of very soft trade that has since followed.

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this decrease their net long position by 72.16% within the market over the week of trade leading to Tuesday 18th. October 2022: to register a new net long position of 4,208 Lots which is the equivalent of 701,333 bags. This net long position has most likely been decreased further following the period of softer trade that has since followed.

The analysts Safras & Mercado have revised their earlier figure for the current Brazil July 2022 to June 2023 coffee year, lower by 1.55% to see production now expected to be at a level of 57.30 million bags., This figure is 3.86% higher than the previous July 2021 to June 2022 coffee year but 20.86% lower, when compared to the last biennially bearing record crop of 20/21. This revision reported to be due to adverse weather conditions within the main producing areas. The larger arabica production year on year is recognised due to the biennially bearing nature of the Brazil coffee crop and the current year being considered an on-year in the cycle, however this biennial larger bearing harvest, for comparative purposes against the last biennial bearing larger record crop of 2020/21, forecast to be around 31.76% below that of the previous biennial larger bearing arabica crop year, that came in a record figure of 51 million bags.

The coffee terminal markets remained under pressure on Friday, with the New York market registering a continuation of the liquidation of the speculative long position. The question is, what influence the evidence of the liquidation of the net long position of the Non-Commercial Speculative sector of the market might have upon the speculative sector of the market for trade this week. The uncertainty of the Brazil rain season with some time ahead and a continuation of the rain needed to set the next Brazil 2023/24 crop to come and while signs are positive for the weather to remain consistent, there could be some caution to sell the market too short. Thus, with the probability that the managed money funds have also liquidated more of their now relatively modest net long position during last week’s trade, it may assist to inspire some degree of corrective buying in what could be an oversold New York market.

The December 2022 to January 2023 contract arbitrage between the New York and London markets widened on Friday to register this at 100.36 usc/Lb. This equates to 52.57% 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 2,150 bags on Friday, to register these stocks at 390,577 bags, with 86.25% of these certified stocks being held in Europe at a total of 336,854 bags and the remaining 13.75% being held in the USA at a total 53,723. Of this, a total 233,839 bags, or 57.31% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 32.24% of these certified coffees, originating from Honduras. There was meanwhile a 646 bag increase to the number of bags pending grading to the exchange; to register 646 bags pending grading on the day.

It was an overall firmer day on the commodity on Friday yesterday, as the US Dollar Index dipped from earlier in the session gains, to fall 0.6%, this a bullish factor for commodities traded in other currencies. The Corn, Soybean, Wheat, Gold, Silver and Platinum markets ended the day on a positive note, the Sugar market remained unchanged on the day, while the Coffee, Cocoa and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.135 Sterling, at 0.985 the Euro and with the US Dollar buying 5.164 Brazil Real.

The New York and London markets started the day on Friday trading on a very soft note, carrying through some degree of selling pressure from the close on Thursday. The markets traded to the south of par for the remainder of the morning session. The late morning session saw both the New York and the London markets pressured lower by long liquidation selling, which saw the markets hit a floor for the day. As the afternoon progressed and the activity in New York increased, the New York market registered a recovery, off of the morning lows. The London market followed suit, albeit in a more sedate manner. This saw the New York market gain momentum during the late afternoon session, to recover all of the earlier losses and trade to the north of par, late in the day. The market dropped back from the days’ highs to settle on a modest near to unchanged firmer softer note at the close, while the London market maintained the earlier lows and settled on a negative note at the close.

The London market ended the day on a negative note with 77.58% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 3.09% of the earlier losses of the day intact. This follow through softer close for the markets, once again does little to inspire confidence, albeit that the New York market attracted support late in the day to recover most of the earlier losses of the day, to possibly see the markets set for a hesitant start to early trade today, against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT              NEW YORK USC/LB.

JAN   1996 – 45                                          DEC 190.90 – 0.15
MAR 1980 – 39                                          MAR 185.80 – 0.60
MAY  1971 – 37                                         MAY 183.05 – 0.80
JUL    1966 – 36                                         JUL 181.60 – 0.75
SEP    1961 – 35                                         SEP 180.10 – 0.65
NOV  1951 – 35                                         DEC 179.45 – 0.50
JAN   1956 – 35                                          MAR 179.50 – 0.40
MAR 1958 – 35                                          MAY 179.35 – 0.30