Coffee Market Report

by | 17 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 77.66% within this market over the week of trade leading up to Tuesday 10th. November; to register a new net long position of 1,096 lots.

Over the same week, the Non-Commercial Speculative sector of this market switched their net long position within the market to a new net short position to register a new net short position of 304 Lots which is the equivalent of 86,183 bags. This net long position has most likely been further decreased and switched to a new short position, following the period of mixed but overall firmer trade that has since followed.

The Green Coffee Association of the U.S.A. have announced that the country’s port warehouse stocks decreased by 264,937 bags or 4.14% during the month of October, to register these stocks at 6,137,128 bags at the end of the month.  Of this total, 68,760 bags were registered in the U.S. Certified coffee stock warehouses at the time of reporting. The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 595,000 bags per week, would conservatively have been at least 1.2 million bags. 

This week on the weather front, Hurricane Iota is making its way towards the central American coastline, the tropical storm has been escalated to a category 5 hurricane. Iota is likely to bring with it heavy rains and high winds causing catastrophic damage to the already battered coastline of Honduras which is has started clearing up operations within the humanitarian disaster left in the wake of hurricane Eta that hit two weeks ago. Within the context of coffee operations in Honduras, trade has mostly come to a halt as the disaster is being addressed and concerns have been raised that heavy rains and strong winds that this next storm is likely to bring, could further impact the already broken-down infrastructure, and with it a degree of coffee crop loss, as these countries have already started to harvest in lower lying areas.  The sustained strength of this latest hurricane as it moves over Central America and the impact that this could have on the coffee crop may cause further delays to the harvest which traditionally is due to begin very soon, this will be closely monitored as Iota moves further inland.

The December 2020 to January 2021 contract arbitrage between the New York and London markets widened yesterday: to register this at 50.33 usc/Lb.  This equates to 43.52% 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 3,250 bags yesterday, to register these stocks at 1,200,762 bags, with 93.3% of these certified stocks being held in Europe at a total of 1,120,510 bags and the remaining 6.7% being held in the USA at a total 80,252 bags.  There was meanwhile a larger in number 3,910 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 67,540 bags.  

It was a firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive sideways track for the day. The Sugar, Cocoa and Coffee markets ended the day on a positive note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.1552% higher; to see this index registered 427.5581.  The day starts with the U.S. Dollar, trading at 1.322 Sterling, at 1.186 the Euro and with the US Dollar buying 5.416 Real.

The New York and London markets started the day yesterday trading om a modest positive note, both markets quickly gained some degree of momentum buoyed by buying support to see the markets trend positive for the morning session. As the afternoon progressed both the London and the New York markets continued on this positive track accentuating the gains for the day. Both markets settled near to the highs of the day.

The London market ended the day on a positive note with 90.91% of the earlier gains of the day intact. while the New York market ended the day on a likewise positive note with 93.43% of the earlier gains of the day intact. This very positive close might inspire some degree of confidence and direction to possibly set the markets for a steady start to early trade today, against the prices set yesterday, as follows:  

LONDON ROBUSTA US$/MT                                 NEW YORK ARABICA USc/Lb.                                                 

JAN   1440 + 30                                                        DEC   115.65 + 6.40

MAR   1449 + 30                                                                 MAR   118.75 + 6.55

MAY   1457 + 27                                                                   MAY   120.55 + 6.45

JUL    1470 + 27                                                                  JUL     122.15 + 6.40

SEP    1486 + 26                                                                   SEP     123.60 + 6.30

NOV   1503 + 26                                                                   DEC    125.30 + 6.10

JAN    1519 + 26                                                                  MAR   126.95 + 6.05

MAR   1535 + 26                                                                    MAY     127.85 + 6.05