Coffee Market Report

13 Jun 2022 | News

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increase their net long position by 9.23% within the market over the week of trade leading to Tuesday 7th. June 2022:  to register a net long position of 25,618 lots, which is the equivalent of 7,262,589 bags. This net long position has most likely been little changed following the period of mixed but overall marginal 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 increase their net long position by 33.25% within the market over the week of trade leading up to Tuesday 7th. June 2022: to register a new net long position of 27,261 Lots which is the equivalent of 4,543,500 bags.  This net long position has most likely been decreased marginally following the period of mixed but overall softer trade that has since followed.

The respected U.S. Department of Agriculture Global Agricultural Network USDA have forecast that the next October 2022 to September 2023 Vietnam coffee crop that is due to start being harvested later this year, shall be 2.06% smaller than the previous October 2021 to September 2022 crop, to total 30.93 million bags. This crop they foresee, to be made up from 29.83 million bags Robusta coffee and 1.10 million bags of Arabica coffee. Added to this they foresee that carryover stocks from the present coffee year shall add 5.60 million bags of coffee, to confirm continued good supply into the next October 2022 to September 2023 coffee year. 

Of this new October 2022 to September 2023 crop, the forecast is that Vietnam will export 2.08% or 500,000 bags less than the current October 2021 to September 2022 coffee year, at a total of 23.50 million bags of green coffee. 

The seasonal rains within the Vietnam Central Highlands coffee growing regions are arrived earlier than expected this, which the USDA have reported has been supportive in the development phase of the 2022/23 coffee crop in these areas. According to the Vietnam Meteorological and Hydrological Administration’s forecasts, there is a 50-60% chance that the La Niña phenomenon will continue through the next quarter, before waning to transition to ENSO (El Niño–Southern Oscillation) neutral conditions. This weather pattern led to wetter than normal conditions during the first four months of 2022, and therefore higher than average precipitation in many parts of the country, including the major coffee growing areas.

The July 2022 to June 2023 Brazil coffee crop harvest is currently underway and winter, cool conditions prevail.  Weather forecasts are mostly for the low temperatures to be somewhere in the lower teens in degrees Celsius for the next week through full moon, due tomorrow 14th June.

The July 2022 to July 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 134.69 usc/Lb. This equates to 58.84% price discount for the London Robusta coffee market. This wide arbitrage may 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 3,580 bags on Friday, to register these stocks at 1,017,300 bags, with 95.46% of these certified stocks being held in Europe at a total of 971,091 bags and the remaining 4.54% being held in the USA at a total 46,209.  Of this, a total 503,501 bags, or 49.49% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 41.40% of these certified coffees, originating from Honduras.  There was meanwhile no change to the number of bags pending grading to the exchange; to register 11,049 bags pending grading on the day.

It was a mixed but overall firmer day on the commodity markets on Friday, as US inflation data released on Friday turned speculative focus to economic risks as consumer prices increased in May underscoring bets of possible interest rate hikes to come. The Corn, Wheat, Gold, Silver and Platinum markets ended the day on a firmer note, while the Coffee, Sugar, Cocoa, Soybean and Palladium markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.228 Sterling, at 1.049 the Euro and with the US Dollar buying 4.988 Brazil Real.

The New York and London markets started the day on Friday trading on a very soft note. The markets would oscillate around par before taking a firmer track into the late morning session, this saw both the New York and London markets hit a ceiling for the day on a modest firmer note before limiting the gains and dropping back from the highs of the day. As the afternoon progressed the New York and London markets would continue to project in a negative direction which would see the markets soon hit a floor for the day, pressured by long liquidation selling. Both the New York and the London markets steadily tracked upward from the lows of the day to stage a modest recovery during the late afternoon session. This saw the New York market recover some of the earlier losses of the day to settle on a softer note, with the London market following the trend to likewise settle on a softer note at the close.

The London market ended the day a negative note with 57.14% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 83.94% of the earlier losses of the day intact. This softer close for the markets does little to indicate direction and with both the New York and London markets settling near to the lows of the day at the close, one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set on Friday, as follows:  

   

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

JUL      2077 – 16                                    JUL       228.90 – 5.75

SEP      2095 – 13                                    SEP      228.80 – 6.00

NOV     2087 – 14                                   DEC     228.25 – 5.85

JAN      2076 – 14                                    MAR     227.10 – 5.80

MAR     2069 – 14                                   MAY     225.80 – 5.80

MAY     2065 – 14                                  JUL      224.05 – 5.65

JUL      2062 – 13                                  SEP     221.90 – 5.35

SEP     2055 – 12                                 DEC     219.90 – 5.10