Coffee Market Report

05 Jan 2022 | News

The National Coffee Institute of Honduras (IHCAFE) have reported preliminary data shows that the country’s coffee exports for the month of December were 91.10% higher than the same month last year, at a total of 386,806 bags. This they say has contributed to the cumulative coffee exports for first three months of the October 2021 to September 2022 coffee year to be 105.11% higher than the same period in the previous coffee year, at a total of 571,083 bags.  This large increase in coffee exports reflected for the month of December likely due to the past year’s lockdown as well as Hurricanes Eta and Iota which caused catastrophic infrastructural damage during the months of October and November last year. 

The National Coffee Institute of Honduras (IHCAFE) have revised their estimate upwards by 2.14% to now report that preliminary data forecasts that during the current October 2021 to September 2022 coffee year, the country is expected to export 5,822,066 million bags, or 0.94% less than the previous coffee year. IHCAFE have likewise reported that Honduras exported 5,877,542 bags during the October 2020 to September 2021 coffee year.

The National Coffee Institute of Costa Rica (ICAFE) have reported that the country’s coffee exports for the month of December were 12.50% higher than the same month last year, at a total of 47,041 bags. This they say has contributed to the cumulative coffee exports for the first three months of the current October 2021 to September 2022 coffee year to be 7.40% lower than the same period in the previous coffee year, at a total of 82,097 bags.

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 cut their net long position within this market by 2.55% over the week of trade leading up to Tuesday 28th. December; to register a new net long position 49,011 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.37%, to register a net long position of 54,524 Lots on the day.    

Over the same week, the Non-Commercial Speculative sector cut their net long position by 3.79% within the market over the week of trade leading up to Tuesday 28th. December:  to register a net long position of 39,421 lots, which is the equivalent of 11,175,679 bags. This net long position has most likely been decreased further 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 raise their net long position by 4.76% within the market over the week of trade leading up to Tuesday 28th. December: to register a new net long position of 48,390 Lots which is the equivalent of 8,065,000 bags.  This net long position has most likely been little changed following the period of mixed but overall sideways trade that has since followed.

The March 2022 to March 2022 contract arbitrage between the London and New York markets widended yesterday to register this at 125.20 usc/Lb. This equates to 54.02% 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 2,957 bags yesterday, to register these stocks at 1,535,247 bags, with 95.98% of these certified stocks being held in Europe at a total of 1,473,581 bags and the remaining 4.02% being held in the USA at a total 61,666 bags.  Of this, a total 702,157 bags, or 45.74% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.30% of these certified coffees, originating from Honduras.  There was meanwhile a 6,700 bag decrease to the number of bags pending grading to the exchange; to register no bags pending grading on the day.

It was a firmer day on the commodity markets yesterday, with widespread speculatively led gains across the commodity basket. The New York Arabica Coffee, Soybean, Corn, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a firmer note, while the Sugar, Cocoa and London Robusta Coffee markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.352 Sterling, at 1.129 the Euro and with the US Dollar buying 5.677 Brazil Real.   

The New York market started the day yesterday trading on a firmer note whilst the London market started the day yesterday trading on a modest softer note, both markets in relatively thin volume conditions.  The New York market tracking higher through the mid-session, while the London robusta market pushed lower. A firmer trend built as activity increased in New York.  The arrival of the America’s at the start of their business day pushed New York higher, triggering further buy stops along the way to accentuate the gains for the day.  

The London market followed continued to trend softer, before hitting a floor to limit the losses for the day’s trade and see the market settle on a softer note at the close. The New York market continued on its upward momentum path before being capped briefly with the introduction of volume selling activity which came in during the late afternoon session. This saw the New York market drop back from the highs of the day and settle on a very firm note at the close.

The London market ended the day on a negative note and with 36.84% of the losses of the day intact, while the New York market ended the day on a positive note and with 67.87% of the gains of the day intact. This mixed but overall firmer close, might inspire some degree of follow through momentum with the New York market settling on a very firm note at the close. There remains a degree of volatility in the market with fresh speculative participation and new Brazil crop forecast news likely to lend some speculative direction. One might think therefore think that the markets are due for a steady start to early trade today, against the prices set yesterday, as follows:      

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

MAR      2349 – 21                                              MAR      231.75 + 8.45

MAY      2293 – 17                                             MAY       231.80 + 8.50

JUL        2276 – 15                                              JUL        231.20 + 8.60

SEP       2269 – 13                                              SEP        230.55 + 8.75

NOV      2265 – 14                                                  DEC       229.35 + 8.90

JAN       2260 – 14                                                MAR      228.85 + 9.00

MAR      2253 – 14                                                 MAY      228.35 + 9.00

MAY      2246 – 14                                   JUL      227.65 + 9.00