Coffee Market Report

by | 29 Mar 2021

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector cut their net long position by 23.52% within the market over the week of trade leading up to Tuesday 23rd. March: to register a net long position of 21,587 which is the equivalent of 6,119,819 bags.  This net long position has most likely been further decreased, following the period of mixed but overall softer 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 market cut their net long position by 6.06% within the market over the week of trade leading up to Tuesday 23rd. March: to register a net long position of 17,561 Lots which is the equivalent of 2,926,833 bags.  This net long position has most likely been further decreased, following the period of mixed but overall, marginally firmer trade has since followed. 

With the month of March coming to a close and with the shipment statistics already at hand, the Vietnam General Statistics office have estimated that the coffee exports for the month of March shall be 21.10% lower than the same month last year, at a total of approximately 2,416,667 bags.  This they say, shall result in the countries coffee exports for the first three months of this calendar year to be 17% lower than the same period last year, at a total of 7,133,333 bags.  

The General Statistics office of Vietnam have at the same time estimated that the value of the country’s coffee exports for the first three months of this year, shall be 11.3% lower than the same period last year, at a total of approximately 771 million US Dollars. 

This reality being that the soft nature of the reference prices of the terminal markets is resulting in internal market price resistance, which is resulting in the asking prices for the Vietnam robusta coffees being too high for buyers to purchase coffees that could be tendered to the certified stocks of the London terminal market. Along with this year, the competition that is coming from last year’s Brazil Conilon robusta coffee crop, which is providing price competition for Vietnam robusta coffees within some markets, with many of these Conilon coffees heading towards or already being held within the London market certified stocks. 

The May-to-May contract arbitrage between the London and New York markets widened on Friday: to register this at 65.04 usc/Lb. This equates to 50.61% price discount for the London Robusta coffee market.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 250 bags on Friday, to register these stocks at 1,835,263 bags, with 94.9% of these certified stocks being held in Europe at a total of 1,741,467 bags and the remaining 5.1% being held in the USA at a total 93,796 bags.  There was meanwhile a larger in number 920 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 42,431 bags.

It was a firmer day overall on the commodity markets on Friday, to see the overall macro commodity index taking something of a positive track for the day, this was supported by broad based gains in the commodity sector backed by a firming US Dollar. The Sugar, Cocoa, Coffee, Gold, Palladium and Platinum markets ended the day on a positive note, while the Silver market ended the day on a softer note.  The day starts with the U.S. Dollar, trading at 1.377 Sterling, at 1.178 the Euro and with the US Dollar buying 5.756 Real.       

The New York and London markets started the day on Friday trading on a firmer note, both markets quickly gained momentum during the morning session to see the markets climb to a high for the day. As the afternoon progressed the New York market hit a ceiling to limit the gains for the day, while the London market continued to trend firmer. Both markets rallied late in the day to see the New York and London market settle on a positive note for the day.

The London market ended the day on a positive note with 89.47% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 63.33% of the earlier gains of the day intact. This firmer close might inspire some degree of confidence, albeit that the New York market fell back from the highs of the day, one might think the markets are due for a hesitant, follow through steady start to early trade today, against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT              NEW YORK ARABICA USc/Lb.                                                            

MAY     1399 + 34                                   MAY     128.50 + 1.90

JUL      1416 + 29                                   JUL     130.50 + 1.85

SEP     1434 + 27                                   SEP     132.45 + 1.85

NOV     1450 + 27                                   DEC     134.80 + 1.85

JAN     1464 + 26                                   MAR    136.70 + 1.80

MAR    1480 + 26                                    MAY    137.60 + 1.85

MAY     1497 + 25                                    JUL        138.10 + 1.90

JUL      1514 + 26                                    SEP     138.35 + 1.85