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 1.62% over the week of trade leading up to Tuesday 4th. January; to register a new net long position 48,218 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.24%, to register a net long position of 55,202 Lots on the day.
Over the same week, 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: 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 International Coffee Organisation ICO have come forth to marginally revise their forecast for global consumption for the October 2020 to September 2021 coffee year, by 0.25% lower, from their previous forecast in November. The forecast for global consumption for the reporting period, is for an estimated 167.25 million bags in the twelve-month cycle.
The ICO has reported that against an estimated global coffee supply of 169.66 million bags, global coffee consumption is estimated at approximately 167.25 million bags, the global coffee markets is indicated to have a very marginal coffee year surplus of 2.41 million bags heading into the October 2021 to September 2022 coffee year. These figures exclude carryover stocks in producer and consumer countries and with this 2020/21 coffee year now complete, the current October 2021 to September 2022 coffee year has begun and harvests in primary coffee producer and exporting countries are underway, to include the largest robusta producer, Vietnam, as well as combined quality washed arabica coffee producer bloc Colombia, Central America, Mexico and Peru. This, while the markets continue to focus their attentions to the development of the Brazil crop to supply 2022/23 coffee potential for production and consumption demand forecasts, to come.
The International Coffee Organisation ICO have reported that the global coffee exports for the month of November were 12.40% lower than the same month in the previous year, at a total of 9.25 million bags. This they say, has contributed to the cumulative global coffee exports for the first two months of the October 2021 to September 2022 coffee year to be 8.52% lower than the same period in the previous year, at a total of 18.93 million bags.
There was a reported decrease in exports from Brazil, who have registered a 36.30% decline in exports when compared to the same month in November of the previous coffee year. This due to biennially bearing nature of the Brazil coffee crop and this year seen to be an ‘off year’ in the cycle. When comparing the export performance against the last biennial bearing lower Brazil export year in 2019, the ICO reports that exports for the month of November were 9.25% lower than the same month in 2019.
There was an increase in exports from Asia as the largest robusta producer, Vietnam, registered a 17.93% increase in exports, when compared to the same two months of the previous coffee year. Exports from India registered a 58.21% increase year on year. Within the ICO report, global exports for the first two months of the current October 2021 to September 2022 coffee year were seen to have decreased by 1.80% year on year from Africa to a total 2.09 million bags, this weighed by a large decreased in exports from Kenya as well as the Ivory Coast.
The ICO report similarly includes within the total global exports, the cumulative export figures, from Mexico and the traditional washed arabica Central American bloc; Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador, to report for the first two months of the current October 2021 to September 2022 coffee year exports posted an increase of 30.55% to a total 940,000 bags. Exports from Honduras and Guatemala the driving force behind the increase in exports form this washed arabica Central American bloc.
The March 2022 to March 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this 132.39 usc/Lb. This equates to 56.36% 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 13,823 bags yesterday, to register these stocks at 1,492,657, with 95.91% of these certified stocks being held in Europe at a total of 1,431,641 bags and the remaining 4.09% being held in the USA at a total 61,016. Of this, a total 675,093 bags, or 45.23% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.63% of these certified coffees, originating from Honduras. There was meanwhile an increase of 2,500 bags to the number of bags pending grading to the exchange; to register 5,945 bags pending grading on the day.
It was a softer day on the commodity markets yesterday, the US Dollar gained ground against a basket of other currencies yesterday. The markets await key inflation data due to be released tomorrow, which may give an indication on an interest rate hike timeline in USA. The Wheat and Silver markets ended the day on a firmer note, the Cocoa market remained unchanged on the day, while the Sugar, Coffee, Soybean, Corn, Gold, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.359 Sterling, at 1.134 the Euro and with the US Dollar buying 5.663 Brazil Real.
The New York market started the day yesterday trading on a modest softer note, while the London market started the day trading on a near to par firmer note. Both markets quickly attracted a degree of selling pressure to see the markets trend in a softer direction for the remainder of the morning session.
As the afternoon progressed the New York and London markets would continue to trend in a softer direction before being pressured by long liquidation selling to accentuate the losses for the day’s trade. Late in the days trade saw both the New York and the London markets rebound from the lows of the day to recover some of the earlier in the day losses, this saw both the New York and London markets settle on a negative note at the close.
The London market ended the day on a negative note and with 73.68% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 60.17% of the losses of the day intact. This softer close, does little to inspire confidence nor does it indicate direction for the coffee markets albeit that the markets recovered some of the earlier losses of the day, one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAR 2260 – 56 MAR 234.90 – 3.55
MAY 2211 – 55 MAY 234.95 – 3.35
JUL 2201 – 52 JUL 234.65 – 3.25
SEP 2198 – 50 SEP 234.20 – 3.25
NOV 2197 – 48 DEC 233.10 – 3.20
JAN 2194 – 47 MAR 232.55 – 3.25
MAR 2187 – 47 MAY 232.05 – 3.20
MAY 2180 – 47 JUL 231.30 – 3.25