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July Coffee Market Report

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 15/07/2024

This report covers the period from Monday 8th July to Friday 12th July and was written by Priscilla Daniel.

Coffee Market

NYC Arabica market opened on Monday 8th July at 230.55 usc/lb (September 2024 terminal) with a narrow intraday volatility of 5.65usc/lb. But on Tuesday, Coffee futures made new yearly highs in a violent rally that saw prices rise by 18.05 usc/lb. Sep24 traded to a high of 252.35 usc/lb. The other wild session on the week was on Thursday where Arabica futures traded 7.95 usc/lb higher in the first 30 minutes of trading on 2,137 lots of volume, and had reached the day’s high of 255.30, which is 11.75 usc/lb over yesterday’s close. The rally lost traction by the time the U.S. came online and traded briefly into negative territory before settling 1.30usc/lb higher basis Sep24. On Friday Arabica settled 3.90 higher at 248.75 basis Sep24, failing to close below the base of support formed around 243, meaning an early test of recent highs is possible to start next week.

This week we have seen the market trade over 10 cents higher intraday on two separate sessions. There was a 32.20 usc/lb range on the week, with a low established on Wednesday 10 July 2024 at 223.10 and a high on Thursday 11 July 2024 at 255.30. Clearly, the market is concerned regarding the level of inventories in destination countries and will continue to closely monitor export flows from the two biggest producers as we move forward into new crop.

London Robusta market soared this week as tightness in supplies and rising differentials dominate market sentiment. Data today showed coffee exports from Vietnam dropped 11.4% in the first half of the year compared to the same time last year. On Thursday The robusta contract traded to a new historic high today of 4681 Agaisnt September 2024. Overall it was a constant bullish market.

COT & certified stocks

  • Non-commercials increased their net long by 6,081 lots to a total 50,902 net long which is the longest in 13 weeks.
  • Friday’s (12/7) Arabica certified stock level: 805,366 bags and Robusta Certified stock level: 6,065 bags.
  • Arabica pending grading (Monday 15th July): 23,264 bags.
  • The open interest increased by 10,591 lots to 221,963 and with options increased by 22,241 lots to 273,533, meaning new longs have been opening positions as prices have risen.

Origin

The Brazil crop year 24/25 production estimated remains on the high levels. It looks to be the biggest for the past 5 years. According to Stone X 24/25 production: 67 million with 44 million Arabica and 23 million Robusta.

Concerning the actual exports Cecafe summarise a record high of 42.9 million bags of green export (including 8.1 million of Conilon). Exports reached an increase of 73% from 4.7 million bags in 20/21.

Compared to May 24, June 24 exports fell by 18.6% especially due to logistics issues out of Santos causing a slowdown in exports. Overall, concerns in Brazil are around the bean size of the actual crop as dry weather cherries did not mature enough so too many smaller beans. The premium between 14/16 VS 17/18 is 10-15 usc/lb where usually is 3-4 usc/lb)With sieve beans below 17/18, coffee growers demand more beans to fill a bag, which in turn increases the unit cost of production.

CEPEA Even with field activities advancing well in Brazil, the prices of arabica and robusta continue to rise. Cepea researchers indicate that this is due to the tight global supply, especially robusta, and the still low volume from the new Brazilian crop being made available in the national spot – it is worth remembering that producers allocate the first lots to the fulfilment of contracts – support domestic values.

CoffeeNetwork (New York) – The latest data from the Vietnam Customs Authority showed that the country exported 1.17 million bags in June, down 11.5% from the same month last year. This brought cumulative exports for the first nine months of the current October 2023 to September 2024 coffee year to 20.94 million bags, a decline of 6.66% from the same period of the previous coffee year.

Coffee Network (Bogota)- Preliminary coffee inventories in Colombia increased to 1.062 million bags of 60 kg in June, up from 1.037 million bags of 60 kg in May, and higher from a revised 978,000 bags in April, according to figures provided by the Coffee Growers Federation. The increase in inventories is the result of rising production in June. Colombia, the world’s third-largest producer, produced 1.172 million bags in June, up by 23% from the same month last year when it produced 956,000 bags of 60 kg, the coffee growers federation said.

Currency & Macro Outlook

Weak US dollar following the publication of the latest US consumer price index. The weaker-than-expected inflation figures stoked Federal Reserve interest rate cut speculation, with the US dollar plunging as the odds of a September cut jumped to around 85%. The pound, meanwhile, was supported on Thursday by stronger-than-expected UK GDP figures. UK economic growth accelerated from 0% to 0.4% in May. Beating forecasts for a 0.2% expansion and further dampening bets on a Bank of England (BoE) interest rate cut in August.

Below the In the FX market on Friday 12th July 2024, GBP/EUR hit a 1 year 11 month high of 1.1914. GBP/USD hit a 51-week high of 1.2993. EUR/USD hit a 38-day high of 1.0911 and opened today at 1.0886. This level is confirmed by a weak US Dollar.


Coffee Market Report 08/07/2024

This report covers the period from Monday 1st July to Friday 5th July and was written by Jack Ravenscroft.

Coffee Market

As seems to be the recent trend, the arabica market consolidated between 220-235 across the 4-day trading week, testing both the lower and upper limits of this range. Prices opened lower on Monday with sellers coming in early with good volume. The low of 219.20 was short lived, with the market closing 1.95 cts down on 224.85 at end of day. There were similar swings on Tuesday with a 9.65 cts trading range. Wednesday cooled off in anticipation of market close on Thursday. Trading volumes were at their weekly lows and relatively constrained at (just!?!?) a 4.65 cts swing.

The Arabica market was closed on Thursday, 4th of July, for the American Independence Holiday. However, the Robusta market remained open and the 2.28% rise, driven by uncertainties over the supply of Vietnam’s crop due to the weather, prompted the arabica market to open strong when trading began on Friday. There are clear signals that some robusta demand is being redirected to arabica. The market closed at 228.95 on Friday afternoon, just a 0.94% gain from the preceding Friday.

COT & certified stocks

↑ Arabica Certified Stocks: 811,359 bags – an increase of 3,999 bags

↑ COT: 52,575 bags – an increase of just under 4,000 bags

Origin

In Brazil, there seems to be limited frost risk in the weeks ahead. A reduction in rain should also see positive conditions for the continued harvest. Cecafe will publish their export date for June next week, giving us an idea of fresh crop flow. These figures should also expose the extent of the container shortages and logistical delays at the port of Santos. The weather is slightly less promising in the north of Brazil.

Heavy rains in the short term will impact the harvest in Peru and Colombia (mitaca). There are also anecdotal reports of wet weather promoting leaf rust in Honduras. 

Currency & Macro Outlook

A big week for elections in Europe. Sir Keir Starmer led the Labour party to an overwhelming majority in the UK Election. Despite a slight upward trend, the response from the pound was relatively muted. It seems the market had already priced in the landslide victory ahead of time given the consistent polling in the build up to Thursday’s vote.

In France, the left-wing NFP alliance has eased fears that the far-right National Rally will win a clear majority in the second round of voting on Sunday, hence boosting the Euro at the beginning of the week. However, the possibility of a hung parliament or an RN outperformance could see the Euro slump back next week.