Coffee Market Report

10 Jan 2022 | News

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 2.54% within the market over the week of trade leading up to Tuesday 4th. January 2022:  to register a net long position of 38,417 lots, which is the equivalent of 10,891,049 bags. This net long position has most likely been increased following the period of mixed but overall firmer 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 2.65% within the market over the week of trade leading up to Tuesday 4th. January 2022: to register a new net long position of 49,673 Lots which is the equivalent of 8,278,833 bags.  This net long position has most likely been decreased following the period of mixed but overall softer trade that has since followed.

Many of the main coffee districts across the Brazil coffee belt have reported heavy rainfall during the first week of January, with many districts so far having received higher than average rainfall for the period. This additional rainfall is a welcome sight to many producers as it will assist to increase the soil moisture levels during this peak summer period and with cherries set, these showers likely to assist further expansion. Weather forecasters are predicting the rains to taper off over the main coffee growing areas during the next weeks, aside from inherent challenge that soft wet ground poses, for accessibility required and coffee inputs in affected isolated areas, this weather is likely to be viewed as mostly conducive.  The Conilon robusta crop readies to begin harvest in a few months’ time, while the biennial bearing arabica coffee crop continues to develop, rains are traditionally sought out, ahead of the usually anticipated mid-year harvesting to start in these areas. Thus, the weather across the expansive Brazil coffee growing areas will continue to be a focus as the new crop develops and ahead of harvest. 

The March 2022 to March 2022 contract arbitrage between the London and New York markets widened on Friday to register this 133.40 usc/Lb. This equates to 55.94% 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 9,937 bags on Friday, to register these stocks at 1,506,480, with 95.95% of these certified stocks being held in Europe at a total of 1,445,464 bags and the remaining 4.05% being held in the USA at a total 61,016.  Of this, a total 678,847 bags, or 45.06% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.86% of these certified coffees, originating from Honduras.  There was meanwhile an increase of 3,445 bags to the number of bags pending grading to the exchange; to register 3,445 bags pending grading on the day.

It was a firmer day on the commodity markets on Friday, the latest round of employment data released by the USA., received by the markets as an indicator that growth was slower than expected in this leading consumer economy.  The Coffee, Cocoa, Corn, Soybean, Wheat, Gold, Silver and Palladium markets ended the day on a firmer note, while the Sugar and Platinum markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.358 Sterling, at 1.133 the Euro and with the US Dollar buying 5.633 Brazil Real.   

The New York and London markets started the day on Friday trading on a modest near to par firmer note. The New York market was seen to oscillate around par for the remainder of the early morning session. The London market attracted a degree of buying support early in the day to see the market trend firmer throughout the early morning session, before encountering resistance to drop back from the early morning highs. As the afternoon progressed both the New York and London markets started to add more value and quickly trigger buy stops along the way to accentuate the gains for the day.  

The markets encountered resistance late in the day, which saw both the New York and London markets drop back form the early afternoon highs. This would see the New York market settle on a very firm note as the market continued to be driven by technical sentiment, while the London market followed suit albeit in a more sedate manner to also settle on a firmer note at the close.

The London market ended the day on a positive note and with 23.68% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 76.70% of the gains of the day intact. This firmer close, albeit that the markets dropped back from the highs of the day, might inspire some degree of follow through momentum to possibly set the markets for a steady start to early trade today, against the prices set on Friday, as follows:      

   

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

MAR      2316 + 9                                                 MAR      238.45 + 6.75

MAY      2266 + 11                                             MAY       238.30 + 6.45

JUL        2253 + 11                                              JUL        237.90 + 6.35

SEP       2248 + 10                                             SEP        237.45 + 6.25

NOV       2245 + 10                                                 DEC       236.30 + 6.15

JAN       2245 + 11                                                MAR      235.80 + 6.10

MAR      2241 + 11                                                MAY      235.25 + 5.95

MAY      2234 + 11                                   JUL      234.55 + 5.90