Coffee Market Report

by | 10 Nov 2020

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 decrease their net long position by 58.49% within this market over the week of trade leading up to Tuesday 3rd. November; to register a new net long position of 4,907 lots. Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.29%, to register a net long position of 54,005 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market cut their net long position within the market by 73.03% to register a new net long position of 2,602 Lots which is the equivalent of 737,655 bags. This net long position has most likely been further decreased, following the period of mixed but overall sideways trade that has since followed.

Hurricane Eta made landfall on the Nicaraguan coastline last week Tuesday, bringing heavy rains and high winds.  The storm weakened as the weather system moved inland, to a category 2 hurricane though it brought about heavy flooding. The storm washed away bridges and flooded homes as it made its way North through to Honduras, and leaving in its wake a dreadful humanitarian disaster, particularly in lower lying areas where flooding has caused mass displacement in affected areas of Honduras.  This, according to the forecasters, is the strongest hurricane to hit this region since 1998. It is perhaps a little too early to understand the full impact of the hurricane for the coffee crops and the harvests within the regions that may have been affected, though one must presume that there is likely to have been a degree of cherry loss within the context of landslides, high winds and flooding in these areas.  Reports suggest at this time, that the greatest challenge in coffee terms, is likely to be damage to infrastructure due to the excess rains and flooding.

The December 2020 to January 2021 contract arbitrage between the New York and London markets widened yesterday: to register this at 45.76 usc/Lb.  This equates to 42.83% price discount for the London Robusta coffee market.  

The Certified washed Arabica coffee stocks held against the New York exchange was seen to increase by 9,355 bags yesterday, to register these stocks at 1,179,789 bags, with 93.7% of these certified stocks being held in Europe at a total of 1,105,665 bags and the remaining 6.3% being held in the USA at a total 74,124 bags.  There was meanwhile a smaller in number 3,435 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 61,949 bags.  

It was a marginally softer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Cocoa markets ended the day on a positive note, while the Sugar and Coffee markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.2970% higher; to see this index registered 418.8854.   The day starts with the U.S. Dollar marginally weaker but steady, trading at 1.318 Sterling, at 1.182 the Euro and with the US Dollar buying 5.386 Real.

The New York and London markets started the day yesterday trading on a modest positive note, both markets continued to trend firmer for the remainder of the morning session. As the afternoon progressed both market reached a ceiling to limit the gains for the day, both the New York and London markets dropped back off the highs of the day to see the markets set on a softer track for the remainder of the afternoon session. Both markets settled on near to the lows of the day.

The London market ended the day with on a modest negative note with 33.33% of the earlier losses of the day intact, while the New York market ended the day on a likewise modest negative note with 16.66% of the earlier losses of the day intact. This softer close and with both markets settling near to the lows of the day does little to indicate direction nor does it inspire confidence and one might think 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 ARABICA USc/Lb.                                                 

JAN   1347 – 3                                                       DEC   106.85 – 0.10

MAR   1361 – 2                                                                MAR  109.55 + 0.10

MAY   1374 – 2                                                                  MAY  111.35 + 0.15

JUL     1390 – 2                                                                 JUL    113.00 + 0.10

SEP     1407 – 2                                                                  SEP    114.55 + 0.10

NOV    1425 – 2                                                                  DEC   116.50 + 0.20

JAN     1441 – 2                                                                 MAR   118.15 + 0.20

MAR    1458 – 2                                                                   MAY   119.20 + 0.15