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 13.36% within the market over the week of trade leading to Tuesday 2nd May 2023: to register a new net long position of 17,201 lots, which is the equivalent of 4,876,407 bags. This net long position has most likely been little changed following the period of mixed 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 1.36% within the market over the week of trade leading to Tuesday 2nd May 2023: to register a new net long position of 40,342 Lots which is the equivalent of 6,723,667 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 winter months are setting in within the southern hemisphere, typically sees the focus of the coffee markets shift to the largest coffee producer and exporter, Brazil, where the arrival of cooler weather to the vast coffee growing areas in Brazil gains heightened focus. Although severe cold weather events across the Brazil coffee belt are relatively rare, the frost occurrence that took place towards the end of July 2021, was extensive in both the areas affected and the severity of coffee tree damage at the time.

The implication for any as yet unforeseen cold weather event to occur in the Brazil coffee growing areas, this early in the ripening and harvesting phase would if early enough, have an impact upon the Brazil July 2023 to June 2024 biennial crop that is shortly due to begin harvest. This crop to come has been forecast at an average estimated median of 63 million bags of which, Conilon robusta that is already in harvest traditionally supplies the Brazilian strong local consumer roaster industry and value add soluble exports, whereas arabica coffee production, which is anticipated ahead of harvest to reach an estimated 41 million bags this production year, traditionally fuels Brazilian natural arabica coffee export supply to coffee consumer markets. Weather forecasts will be monitored by both the speculative sector and coffee industry participants, as winter months progress through August, to potentially add further volatility to the coffee futures markets, in the short to medium term.

The Brazil Real currency has strengthened by 2.55% against the US Dollar over the past 7 days. A stronger Brazil Real traditionally discourages export selling from Brazil’s coffee producers.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,027 bags on Friday, to register these stocks at 657,297 bags, with 96.88% of these certified stocks being held in, Europe at a total of 636,789 bags and the remaining 3.12% being held in the USA at a total 20,508. Of this, a total 263,069 bags, or 40.02% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 56.26% of these certified coffees, originating from Honduras. There was meanwhile a no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.

The July 2023 to July 2023 contract arbitrage between the London and New York markets widened on Friday to register this at 75.97 usc/Lb. This equates to 40.40% 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.

It was a firmer day on the commodity markets on Friday, with the leading in influence Oil markets firmer on the day. The Coffee, Cocoa, Sugar, Corn, Soybean, Wheat, Platinum and Palladium market ended the day on a positive note, while the Gold and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.265 Sterling, at 1.104 the Euro and with the US Dollar buying 4.953 Brazil Real.

The New York and London markets started the day on Friday trading to the north of par on firmer notes respectively. During the early morning session, the New York market tracked upward, with the London market following suit to likewise set a positive track through the morning. As the afternoon progressed, the New York market buoyed by buy stops, with speculative buyers active, assisted a continuation of upward momentum which continued to build during the session. During the mid-afternoon session both the New York and London markets encountered some selling pressure to drop back form the earlier highs and trend back towards par, this pressure was short lived as the markets found support near to the lows of the day to gain momentum into the later afternoon session. The New York market was capped briefly during the late session to settle on a firmer note at the close, maintaining most of the earlier gains, while the London market followed suit to also settle on a positive note, near to the highs of the day at the close.

The London market ended the day on a positive note with 93.65% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 80.95% of the earlier gains of the day intact. This very firm close for the markets, with both the New York and London markets tracking upward throughout the session to settle near to the highs of the day, might possibly see the markets set for a follow through steady start to early trade today, against the prices set on Friday, as follows:

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

JUL      2471 + 59                                     JUL     188.05 + 5.10
SEP      2446 + 55                                     SEP     185.60 + 5.10
NOV    2408 + 54                                     DEC    183.75 + 5.30
JAN     2381 + 54                                     MAR   183.65 + 5.35
MAR   2360 + 52                                     MAY   184.00 + 5.25
MAY   2341 + 52                                     JUL     184.40 + 5.15
JUL     2325 + 52                                     SEP     185.05 + 5.10
SEP     2315 + 52                                     DEC    185.30 + 5.05