Coffee Market Report

22 Jun 2022 | News

The September 2022 to September 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 139.43 usc/Lb. This equates to 59.82% 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 9,756 bags yesterday, to register these stocks at 981,901 bags, with 95.43% of these certified stocks being held in Europe at a total of 936,987 bags and the remaining 4.57% being held in the USA at a total 44,914.  Of this, a total 468,672 bags, or 47.73% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 42.89% of these certified coffees, originating from Honduras.  There was meanwhile a 3,249 bags decrease to the number of bags pending grading to the exchange; to register 2,600 bags pending grading on the day.

It was a mixed but overall firmer day on the commodity markets yesterday, with the US Dollar losing ground against a basket of other currencies, this follows the announcement from the US Federal Reserve of the biggest interest rate hike since 1994 which has seen many other major central banks follow suit. The Coffee, Cocoa, Sugar, Silver, Platinum and Palladium markets ended the day on a firmer note, while the Wheat, Corn, Soybean and Gold markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.227 Sterling, at 1.052 the Euro and with the US Dollar buying 5.189 Brazil Real.

The New York and London markets started the day yesterday trading on a firmer note. The markets would trend firmer, buoyed by some degree of buying support for the remainder of the morning session. 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, this saw a firmer trend build as activity increased in New York. The London market reacted to follow the New York market higher. This saw both the New York and the London markets continue to trend firmer throughout the afternoon session before hitting a ceiling late in the day, to limit the gains for the day and see the markets drop back slightly. The New York market was seen to drop back from the highs of the day and settle on a firmer note at the close, while the London market followed suit to also settle on a firmer note at the close. 

The London market ended the day on positive note with 80% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 63.05% of the earlier gains of the day intact. This firmer close for both the New York and London markets might inspire some degree of follow through confidence and momentum for the markets, albeit that the New York market dropped back from the highs of the day during the late afternoon session and with first notice day today 22nd June on the prompt month, one might think that the markets are due for a follow through steady start to early trade today, against the prices set yesterday, as follows:   

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

JUL      2065 + 23                                    JUL       233.10 + 5.45

SEP      2079 + 24                                    SEP      232.35 + 4.95

NOV     2074 + 22                                  DEC     231.00 + 4.70

JAN      2059 + 20                                    MAR     229.10 + 4.50

MAR     2049 + 18                                   MAY     227.55 + 4.40

MAY     2044 + 16                                  JUL      225.75 + 4.30

JUL      2041 + 17                                 SEP     223.70 + 4.25

SEP     2035 + 17                                 DEC     221.90 + 4.30