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 15.94% over the week of trade leading up to Tuesday 16th. November; to register a new net long position 55,284 lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 6.71%, to register a net long position of 59,493 Lots on the day.
Over the same week, the Non-Commercial Speculative sector of this market raise their net long position within the market by 14.88% to register a new net long position 46,585 lots, which is the equivalent of 13,284,035 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 Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of October were 58,541 bags or 13.68% higher than the same month last year, at a total of 486,534 bags. Uganda Robusta exports registered a 14.81% increase when compared to the same month last year, to total 426,128 bags and Arabica exports registered a likewise increase by 6.44% to a total 60,386 bags exported in October this year.
The respected United States Department of Agriculture USDA Global Agricultural Information Network have revised their estimate for the October 2021 to September 2022 Indian coffee crop production, higher by 2.22% at a total 5,530,000 bags. This revised figure is made up from the production of 1,280,000 bags of arabica coffee and 4,250,000 bags of robusta coffee. The report further anticipates green coffee exports from this primarily Robusta producing country to reach 3,680,000 bags in the October 2021 to September 2022 coffee year.
The USDA estimates October 2021 to September 2022 yields for Arabica and Robusta coffee at an average of 789 kilograms, per hectare which is a six percent improvement on the previous year. The USDA estimates the October 2021 to September 2022 Indian domestic coffee consumption to grow by 2.50% to 1,210,000 bags when compared to the previous year. This is largely driven by sales of soluble coffee for at home consumption through e-commerce and retail channels. As well as a rise in at home consumption that will be supported by the gradual reopening of the hospitality (hotels, restaurants, catering events) and institutional (corporate offices, airports) sectors.
The January 2022 to March 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 129.20 usc/Lb. This equates to 55.86% price discount for the London Robusta coffee market. This wide arbitrage will likely 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 22,264 bags yesterday, to register these stocks at 1,752,968 bags, with 95.92% of these certified stocks being held in Europe at a total of 1,681,373 bags and the remaining 4.08% being held in the USA at a total 71,595 bags. Of this, a total 906,959 bags, or 51.74% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 42.29% of these certified coffees, originating from Honduras. There was meanwhile an increase of 12,125 bags to the number of bags pending grading to the exchange; to register 12,125 bags pending grading on the day.
It was a softer day on the commodity markets yesterday, with the US Dollar gaining further ground against a basket of other currencies for a second consecutive session. As well as expectations that the Federal Reserve will hike interest rates sooner than expected. The London Robusta Coffee, Cocoa, Wheat, Corn and Soybean markets ended the day on a firmer note, while the Sugar, New York Arabica Coffee, Gold, Silver, Palladium and Platinum market ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.339 Sterling, at 1.124 the Euro and with the US Dollar buying 5.587 Brazil Real.
The New York and London markets started the day yesterday trading on a modest close to par firmer note. The markets quickly attracted selling pressure to see both the New York and the London markets trend softer for the remainder of the morning session before bouncing off the lows of the morning and gaining momentum with a degree of buying support buoying the markets in a positive direction. As the afternoon progressed the New York and London markets continued to add more value gaining momentum during the early afternoon session.
The markets were seen to hit a ceiling during the early afternoon session limiting the gains for the day, this saw both the New York and the London markets set on a softer path for the remainder of the session, the New York market dropped back to hit a low for the day but encountered resistance and recovered to settle on a softer note, while the London market rallied late in the day to settle on a modest near to unchanged positive note at the close.
The London market ended the day on a modest close to par positive note and with 50% of the gains of the day intact, while the New York market ended the day on a negative note and with 39.62% of the losses gains of the day intact. This mixed but overall softer close does little to inspire confidence, albeit that the New York market recovered some of the earlier lows of the day one might expect little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 2251 + 6 MAR 231.30 – 2.10
MAR 2198 + 1 MAY 231.30 – 2.10
MAY 2175 + 2 JUL 231.20 – 2.00
JUL 2173 + 5 SEP 231.00 – 2.00
SEP 2170 + 7 DEC 231.25 – 2.00
NOV 2172 + 7 MAR 231.55 – 2.00
JAN 2181 + 7 MAY 231.60 – 2.05
MAR 2179 + 7 JUL 231.60 – 2.05