Good day. Welcome to DRWakefield’s Weekly Coffee Market Report!
This report touches upon the Arabica and Robusta coffee futures market, currency pairings and news from origin. See our Market Report Terms page for clarity on any terminology in the coffee market report below.
Live Market Data
Coffee Market Report 29/01/2024
This report covers the period from Monday 22nd January to Friday 26th January and was written by Phil Searle.
New York Coffee Market
The Arabica market started the week with strong gains as index funds ended their re-balancing. Once again, concerns about short-term shortages were noted around the market – backwardation conditions grew for the nearby switch as well as the second position May/July. Mid-week we saw a spec liquidation as the market failed to attract solid buyers, this was helped by one the large trade houses giving an optimistic Brazil crop estimate. The weather in Brazil continued to fight back against the bears in the market, despite some recent rains, analysts observed that this is mainly in the northern half of the producing regions.
COT & certified stocks
↑ Non-commercials increased their net short from -2,280 to 4,112 bags net short (change of 1,832 bags)
↓ Arabica Certified Stock level: 249,206 bags (down by 4772 bags)
↑ Arabica pending grading: Pending grading added 9,430 to 73,708 bags
Origin
Weather has been somewhat wet in Tanzania in the months of Nov-Jan. This could influence the development of CBD (coffee berry disease), crop estimates are in the region of 715,000 bags of arabica which is a 12% increase.
The re-routing of shipments continues to be the biggest bug bear in the industry. Freight has more than doubled from certain origins and increased transit times from 30 to 45-60 days. This seems to not only affect the Asia/African routes but also the Latin American routes due to a lack of available containers – déjà vu.
Currency & Macro Outlook
The Bank of England is set to maintain current interest rates on the 1st Feb.
Jeremy Hunt, UK finance minister is optimistic about implementing tax cuts before a national election expected later this year, following a budget deficit of £7.77 billion ($9.9 billion) in December – let us all pray for some tax cuts!
Good news for skiers is that the GBP/EUR hit a 4.5 month high of 1.1733 just in time for melted cheese and a fine glass of French wine!
Coffee Market Report 22/01/2024
This report covers the period from Tuesday 16th January to Friday 19th January and was written by Jack Ravenscroft.
New York Coffee Market
Arabica Coffee Market
The arabica market began and closed the week at similar levels, with a rise of just over 2cts/lb from 182.70 to 184.85. However, the range across the 4-day trading week was more severe. Coffee prices worked between 175.55 and 187.10 with the Mar’ 24 terminal remaining the most liquid. Support at the 175-level was tested on Thursday 18/01 triggering an initial short covering that was followed up by fresh buying on Thursday afternoon and into Friday 19/01. Sustained market levels see diffs continue to decrease, particularly in Central America.
Robusta Coffee Market
The robusta market remains high this year. Adverse weather in Vietnam have revised crop projections down. Stock concerns have been compounded by the worrying conflict in the Red Sea. Freight prices continue to rise as the situation takes hold.
COT & certified stocks
↑ Non-commercials increased by + 4,074 lots to a net long position of 29,253 lots.
↓ Certified stock decreased by -8,338 bags to net long position of 253,108 bags.
↓ ICE Arabica Lots pending grading decreased by 11,318 bags bringing the total to 39,062 bags.
Origin
On January 15, Cecafé released its report on Brazilian exports for December ’23. During the month, 4.116 million 60kg bags were exported, compared to 3.238 million in the same month of 2022. An increase of 21.3%. This follows a 15.4% increase in November ’23 from the same month ’22.
Colombia differentials best encapsulate weakening differentials in the region. Prices for Excelso EP sit > 50% below the 10 year moving average for the quality. November ’23 saw > 1 million bags exported from Colombia for the first time since Dec ’22 according to the FNC.
Currency & Macro Outlook
The US dollar remains on a positive trajectory with rate cut expectations being pushed back. The greenback will continue to attract support as a safehaven currency whilst the Israel-Gaza conflict and Red Sea crisis continue to cause geopolitical uncertainty.
The European Central Bank (ECB) President Christine Lagarde spoke on Friday but refrained from commenting on monetary policy as the bank entered its blackout period ahead of its policy meeting week commencing 22/01.
Coffee Market Report 15/01/2024
This report covers the period from Monday 2nd January to Friday 12th January and was written by Mantvydas Trainavicius, Senior Coffee Trader.
New York Coffee Market
The last trading day of 2023 finished with a big drop of about 10usc/lb at 188.30 for the NYC Mar2024 Terminal. The market recovered a couple of cents on the first day of trading in 2024, giving a bullish start to the year, but the 3rd of January brought bearish action and the market continued to fall for the rest of the week.
By the end of 12th January, we had the market closing at 180.00 for the NYC Mar2024 Terminal, which gives us a total of 8.65usc/lb drop in two weeks. The market hasn’t been as volatile as December 2023 where we had 10.00+usc/lb moves on a daily basis.
A slow start compared to last year as well, which saw a 20.00usc/lb drop in two weeks. This week is shorter for the NYC as the market is closed on the 15th of January due to Martin Luther King Jr. Day in the United States.
COT & certified stocks
↑ Non-commercials: Net Long position of 25,179 lots (+2,623)
↑ Certified stock: Net Long position of 261,446 bags (+3,380)
↑ ICE Arabica Lots pending grading: 50,380 bags (+2,380)
Origin
After Guatemala’s coffee exports fell below expected volumes for the 22-23 harvest, exports have recovered for the 23-24 harvest, according to figures from the Guatemala’s coffee association Anacafe
Coffee production in Colombia, the world’s third-largest coffee producer, totalled 11.35 million bags (60kg bags) in 2023, up 2.2% from the 11.1 million bags produced in 2022, the coffee grower’s federation said.
The latest data from the Costa Rican Coffee Institute (ICafe) showed that the country exported 38,430 bags of coffee in December, down 6.9% from the 41,262 bags exported in the same month last year.
The Peruvian Chamber of Coffee and Cocoa said the Andean nation shipped 2.8 million bags in January-November, down 26% from the previous year.
The Tanzania Central Bank has published its annual report which showed that coffee production for the year through June has totalled 82,500 tons, a 24% increase from the 66,800 tons produced the prior year.
Currency & Macro Outlook
December’s CPI figures reported inflation accelerated from 3.1% to 3.4%. This beat forecasts for a more modest rise to 3.2% and weakens the case for early interest rate cuts from the Federal Reserve (US). The USD exchange rates were supported by a surprising decline in the number of people claiming unemployment in the US last week.
The European Central Bank President, Christine Lagarde said on Thursday that she believes interest rates have reached their peak. However, the central bank needs to be certain that inflation has fallen to the 2% target to initiate any rate cuts.
Forecasts by the UK budget office reveal that the UK’s next government will have little room to implement tax cuts or increase spending if the economy performs worse than expected.
It’s been quite a stable week for both GBP/USD and EUR/USD, both ranged by 0.01 points through the week.
