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 04/11/2024
This report covers the period from Monday 28th October to Friday 1st November 2024 and was written by Priscilla Daniel.
Coffee Market
NYC Arabica market opened on Monday 28th October at 247.25 usc/lb (December 2024 terminal) with an intraday volatility of 9.40usc/lb and close at 252.35. On Tuesday, Dec-24, it continued to recover, reaching the high of the week at 254.25. Volatility is expected to continue as the market digests various reports regarding the condition of the developing Brazilian crop.
On Thursday, 31st October, NYC ended the month 26.25usc/lb lower compared to the last day of September 2024. On the same day, the market tried for the third week in October 24 to make new lows, but still holds the low of 243.35 (reached at the beginning of October). On Friday, Arabica led lower from the open to 241.30, coming back during the session to trade to a high of 246.30 as commercial buyers took advantage of the dip. Overall, the week had a bearish pattern and market closed on Friday 1st November at 242.95. (- 4.30 usc/lb from Monday opening). However, commercial demand was insufficient to prevent the market from closing in negative territory. Technically, we are still seeing a record-long spec position, which, coupled by a strengthening US dollar ahead of the Presidential Election next month, could keep the Arabica market under pressure in the short term.
Robusta price action followed Arabica, Bearish Market starting the week on Monday with a closed level at 4502 USD/MT and on Friday closing at 4279 US/MT, below the 100-day EMA support at 4362. 1,185 lots of Brazilian conilon were tendered today with 1,163 lots going to one stopper. X4/F5 closed the day at -25, and we began the session with 2,685 lots of open interest in the spot contract.
COT & certified stocks
↑ Non-commercials increased their net long by 16,424 bags.
↑ Arabica certified stock level: 856,423 bags and Robusta Certified stock level : 3,907 bags.
↓ Arabica pending grading: 96,282 bags.
↓ Open interest for Arabica coffee futures at ICE Futures fell 288 contracts to 215,285 contracts during trading on October 29, official data shows.
Origin
Brazil
The rains that occurred in key coffee-producing regions in October have promoted good flowering in the crops, improving producers’ expectations for the 2025/26 harvest. According to researchers from Cepea, the current focus is on intensifying treatments to convert as many of these flowers as possible into cherries for next year. For a satisfactory setting to occur, it is essential that the rains continue. Otherwise, Cepea researchers explain that the cherries may not set, an instead, fall, leading to more significant losses in the upcoming season.
Many exporters continue to struggle with cash flow as cargo accumulates at ports. Shipments remain backlogged as container dispatch delays persist.
Colombia
Bogota (Coffee Network) – Colombia, the world’s third-largest coffee producer, is well-prepared to meet the January 2025 European Union deforestation law, Gustavo Gomez, general manager of the Colombian coffee exporters association Asoexport said in an interview.
Overall, some 24% of Colombia’s total coffee exports are shipped by the European Union. Colombia exported 7.787 million 60-kg bags.
The traceability and georeferencing is also advanced as 30-40% of Colombia’s coffee exports are certified coffee, which is synonym of traceability.
Nicaragua
Interview with CoffeeNetwork, Ivania Rivera, Senior Trader with Nicaragua-based Aldea Coffee explains that labor is a main concern for coffee producers as the “political and economic situation has led to the emigration of Nicaraguans, including agricultural workers, with fewer laborers available for the coffee harvest and drying process.” Smallholders can rely on family and community labor, but for larger farms, this could mean losing part of their harvest.
“As of today, there is no coffee left to sell from the season 2023-2024 but not because of the traditional main buyers, but because a lot of the coffee was delivered to the exchange,” she said.
Shipping and logistics have become increasingly difficult for Nicaragua and the entirety of Central America. “2024 was the year for roll-overs every week, first because of the limitations on container availability,” she said. “Second because of new regulations for containers permissions in Nicaragua: in the past the steamship lines used to get a permission valid for 9 months for a container to transit and stay in Nicaragua, this period was reduced to 90 days; and, third a lack of truck drivers due to migration.”
Data provided by Aldea Coffee showed that the loading ports/customs for coffee exports in Nicaragua, Honduras and Costa Rica fell from 2.26 million 69-kg bags in 2022 to 1.65 million 60-kg bags in 2024.
Costa Rica
CoffeeNetwork (New York) – Data from the Costa Rican Coffee Institute (ICafe) shows that for the entirety of the October 2023 to September 2024 coffee year, the country has exported 1.017 million bags of green coffee. This represents an increase of 1.6% compared to the 1 million bags exported in the previous coffee year.
Production for the 2024-2025 harvest was estimated by the Technical Management of ICAFE at a total of 1,823,138 “fanegas” (October 2024), which, if confirmed, will be 13.42% higher than the 2023-2024 harvest, which concluded at 1,607,406 fanegas. One fanega of coffee is a unit of volume equivalent to 400 liters, from which between 43.8 to 44.5 kg of green coffee is obtained, based on the national average of the last four harvests.
ICO
CoffeeNetwork (New York) – The latest data from the International Coffee Organization (ICO) showed that global coffee exports totaled 10.7 million bags in September, an increase of 24.4% from the 8.6 million bags exported in the same month last year. This brought cumulative exports for the entirety of the October 2023 to September 2024 coffee year to 137.3 million bags, up 11.7% from the 122.9 million bags exported in 2022-2023.
Cumulative imports for the first 10 months of the October 2023 to September 2024 coffee year total 108 million bags, down 1.6% from the 109.8 million bags imported globally in the same period of the previous coffee year.
Currency & Macro Outlook
The pound recovered from its post-budget slump on Friday as the anxiety in UK markets eased, it hit 1.298.
EUR/USD stabilised just below 1.09 ahead of the all-important U.S. presidential vote, but a Donald Trump win would ignite significant selling pressures again.
For the coming week, tomorrow, markets will focus on the US presidential and congressional election, the UK global services PMI and the US ISM services; followed by the Eurozone services PMI and the US global services PMI on Wednesday. The primary focus on Thursday will be the announcement of the BoE rate and the decision on the US FOMC rate.
Coffee Market Report 28/10/2024
This report covers the period from Monday 21st October to Friday 25th October and was written by James Duncan.
Coffee Market
The market opened the week over 2.5 c/lb lower than the previous week’s close at 253.50 c/lb on news of good flowering in Brazil and rainfall in central Brazil. The downward trend continued throughout the week to a low of 244.10 c/lb on Thursday before rallying in the final hours of Friday to close out the week at 248.40 c/lb.
The driving force behind this run has been the forecast in Brazil – with scattered rains throughout the coffee regions during the week and showers expected to continue through early November, setting a positive flowering. Towards the end of the week, the market was unable to sustain enough bearish pressure to pierce the support and closed out the week slightly higher.
COT & certified stocks
↓ Non-commercials decreased their long position by 1,340 to 50,548 lots long and increased their short position by 585 to a total of 11,727 lots short.
↑ Certified stocks increased to 843,284 bags with 118,437 pending.
Origin
In a CoffeeNetwork interview with the president of ‘La Asociación de Exportadores de Café de Honduras’, Miguel Pon claimed that Honduras is expected to have an export of 5 million bags for 2024-25 crop – an increase of 7% year on year. He also claimed that although demand has been slow, they have seen an uptake in the past week. This was seemingly backed up by comments from Pedr Mendoza, the head of Honduras’ coffee organization IHCAFE, who claims that they have seen better production for the coming harvest.
Colombia experienced an increase of 10% year on year for the 2023/2024 crop due to increased sun exposure from El Niño. Reduced rainfall and higher temperatures, coupled with an increase in Coffee Berry Borer observations, led to a higher percentage of lower grade coffee, however. With the 2024-25 harvest well under way it remains to be seen what the rainfall deficit from earlier in the year will have on the crop.
Currency & Macro Outlook
The GBP has remained steady over the last week as any fears for what the autumn budget may hold have largely evaporated. Rachel Reeve’s proposition to change fiscal rules, allowing her to borrow up to £50bn, has been backed by Lloyds and Barclays, adding to the stability in the build-up to the budget at the end of October.
The dollar finished last week slightly weaker after reports that US durable goods orders shrank by 0.8% in September. The dollar is forecast to stay stable at best as election uncertainty looms and several high-impact data releases are due to be released in the coming week.
Coffee Market Report 21/10/2024
This report covers the period from Monday 14th October to Friday 18th October and was written by Dave Rabbich.
Coffee Market
NY C
Last week coffee futures exhibited a fairly steady week in terms of price movements. The ups and downs we did see were driven by weather forecasts, inventory levels, and global export trends. The December front month for Arabica opened the week at 251.05 c/lb and closed at 257.30 c/lb. London Robusta opened at 4,820 US$/MT and closed 4,702 US$/MT.
The key drivers of this have included forecasts indicating a decrease in expected rainfall in Minas Gerais. Showers are now projected to be scattered rather than widespread, alleviating some fears of excess moisture but maintaining concerns about excessive dryness. Since April, Brazil has experienced consistently below-average rainfall, negatively impacting coffee trees during the flowering stage and jeopardizing the upcoming 2025/26 Arabica crop.
Coffee inventories are tightening, supporting higher prices. As of the start of October 3, ICE inventories fell to a 4 month low of 795,000 bags. Similarly, Robusta inventories decreased to a 5-1/2 month low of 4,000 MTS on Friday.
One element placing downward pressure on the market is that the ICO has reported that 6.5% year-on-year increase in global coffee exports for August. Brazilian exports rose sharply, with September exports increasing 34% year-on-year. This has gone some way to create the logistical bottlenecks that have created a significant backlog, with over 2 million coffee bags (6,529 containers) delayed in Brazilian ports as of September 2024. This has resulted in additional costs for exporters and a loss of potential foreign exchange earnings. News of the backlog will only add fuel to the bullish fire.
Robusta
Prices for Robusta coffee are bolstered by concerns over production declines in Vietnam due to drought conditions, further tightening the global supply landscape.
COT & certified stocks
↓ Non-commercials decreased their net long down to 36,024 futures lots.
↑ Commercials increased their net short to -95,754 futures lots.
Origin
In Central America, the rainy season is expected to conclude soon, though forecasts still indicate a likelihood of rain which is aiding the region’s recovery from the low precipitation levels seen in May. In El Salvador and Honduras, harvesting has commenced in the lower-altitude areas across the region. However, there are growing worries regarding the high incidence of coffee leaf rust and coffee berry borer, issues that have been exacerbated by the elevated humidity levels from the rainy season.
National Coffee Day was celebrated on October 1st, marking the official start of the new harvest season. According to the National Coffee Institute (IHCAFE), coffee exports for the 2024/2025 season have increased by 14.5% compared to the previous season. However, there are concerns about potential impacts on exports due to the EU Deforestation Regulation, although this may be delayed by a year. A final vote will decide if this will happen in December.
Currency & Macro Outlook
Overall the USD Dollar Index has been strengthening since early October but over the last week it fell pressured by lower Treasury note yields and reduced liquidity demand due to a strong performance in equities. The weakening dollar provided a favourable environment for precious metals, driving record prices amid ongoing global uncertainties. Investors may shift their focus to coffee futures as a hedge against dollar fluctuations, especially during periods of economic uncertainty. Increased speculative interest can drive prices higher, particularly if coffee inventories remain low and global demand is robust.
The FED is still targeting 2% inflation, and the market is currently pricing in a 95% probability of a -25 basis point rate cut at the upcoming November meeting. With UK inflation now under 2%, eyes are on Labour’s autumn budget to see what monetary policies will be implemented.
Coffee Market Report 14/10/2024
This report covers the period from Monday 7th October to Friday 11th October, and was written by Hannah Wakefield.
Coffee Market
After weeks of uncertainty as to whether the C market will breach the 300 c/lb level, everyone breathed a sigh of relief last week, with the market remaining safely within the 240s and 250s. The week opened on Monday at 252.85 c/lb, and, following good news of rains in Brazil, fell off to 243.35 c/lb, before closing at 244.65 c/lb. However, these levels were not maintained for long and the market made up the ground lost over the next two days, and by Thursday hit the weekly high of 257.10 c/lb. Although the continued positive weather reports coming from Brazil, as well as weakness in the Brazilian Real, kept the market from shooting any higher, and it eased off to 254.75 c/lb by close of play on Thursday. Friday faced continued downward pressure on the Real, and the uptick on market open to 256.45 was not able to sustain itself. The market closed out the week at 252.05 c/lb, after some turbulence both up and down, just 0.80 c/lb lower than Monday’s open.
There is still no news on whether EUDR will be postponed a year or not, although some reports suggest that we should hear an update by the end of October. The market will no doubt react to whatever news may come our way, but in the meantime, exporters and importers are continuing to prepare themselves for the initial deadline of 31 December 2024.
COT & certified stocks
↓ Non-commercials, Index Trader and Non-Reportables all reduced their net longs by 4700, 2788, and 1376, respectively.
↑ Arabica washed certified stock level: 813,999 bags
↑ Arabica pending grading: 52,160 bags.
Origin
The long-awaited rains in Brazil have finally started to fall, and the forecast is looking positive across all major coffee-growing regions in the country, with more rain to come. This is crucial for the development of the flowering, which will determine the 2025/2026 crop. The forecast does look positive, yet it is too early to say whether it’s just too little too late. It remains too early to tell whether the trees will recover from the worst drought Brazil has seen in 40 years. Whilst there is certainly still hope for the 2025/2026 crop, there’s no doubt that it will be impacted by the drought.
In other news in Brazil, whilst logistics and shipping delays are set to continue, Cecafe has published figures stating that exports of coffee from Brazil have reached record highs. September exports increased by 33% (31.9% for Arabica and 40.9% for Robusta) with a total of 4,464,126 bags exported in the month, which is an all time high for September. 3,193,749 bags of those bags were Arabica, a figure that is getting close to volumes we haven’t seen since 2020. The first 9 months of 2024 seem similarly impressive, with 36,428,348 bags being exported in total, up 38.7% compared to the same period in 2023. However, it is important to remember this is only in the context of 2023 exports.
Currency & Macro Outlook
It was a slower week for GBP, as it struggled to maintain above 1.31 GBP/USD. This was largely driven by dovish comments from Andrew Bailey, the Governor of the Bank of England, causing many to believe that the BoE will be cutting interest rates at a faster pace than previously thought. However, there was some recovery towards the end of the week, mostly driven by anticipation of Chancellor Rachel Reeves’ Autumn Budget as well as the release of figures showing that the British Economy expanded by 0.2% in August after 2 months of zero growth. The looming budget and speculation are both positive and negative, but with some reports suggesting that the government’s revenue-raising plans are in ‘complete disarray’, GBP investors will be wary and optimism is looking on the thin side
Coffee Market Report 07/10/2024
This report covers the period from Monday 30th September to Friday 4th October and was written by Henry Clifford
Coffee Market
The C market opened on Monday morning at 268.15 c/lb, and although it spent most of the day in the red, it finished at 2.10 c/lb higher at 270.25 c/lb. Having closed above 270 c/lb, talks around “Will we hit 300 c/lb?” surfaced once more. Trading on Tuesday was dominated by this narrative but ultimately the market could not sustain this level and it closed at 264.15 c/lb.
The big news of the week however, was EUDR. The European Commission proposed delaying the law by another 12 months as it recognised industries and Member States were not ready. However, the proposal needs sign off from the European Parliament and Member states so uncertainty remains. You can read more here but it may be that we won’t know till very close to the current deadline of the end of 2024 whether or not the delay will happen. This means coffee exporters and importers will likely need to be ready regardless.
The news prompted a big sell off in the coffee market as 9 c/lb were wiped off the board on Wednesday when the news was released. The drop continued on Thursday before the market reclaimed some value on Friday, settling at 257.35 c/lb to close out the week.
COT & certified stocks
↓ Non-commercials reduced their Net long by 925 lots to total 40,724 Net Long.
↓ Arabica washed certified stock level: 804,576 bags
↑ Arabica pending grading: 54,066 bags
Origin
Rains in Brazil have been pushed back once more as hotter temperatures remain stickier than expected. There were some showers across the coffee belt but they were short lived and soils have returned to their prior dry state. Most of the Arabica trees have not had their first flowering yet for the upcoming crop, so the buds are still exposed to the sun and heat: until we have our first flowering, it is difficult to ascertain what the impact of this dry weather will be on the 25/26 harvest. That question looms over the market like a grey cloud: all people will is a real cloud, though.
The other notable topic in Brazil, other than the weather, is logistics. Typically, shipments coming out of Brazil are much smoother compared to other origins, but the Coffee Exporters Association in Brazil, Cecafé, has issued a concerning report highlighting ongoing shipment delays at Brazilian ports. According to the report, 69% of August FOB shipments faced delays, resulting in over 1.80 million bags of coffee delayed for shipment during that month. There are not enough containers to service bookings and this is causing many to get rolled and rolled – will we see a paucity of Brazilian coffee at destination? Usually July-September is always a bit lean as people wait for new crop shipments to come in but these delays might lengthen this typically lean period.
Currency & Macro Outlook
DXY
It was a great week for the US Dollar as this strengthened significantly against its key currency pairs. We started the week at 1.116 EUR/USD and 1.337 GBP/USD and finished at 1.095 and 1.312 respectively. Will this stronger Dollar keep a lid on the coffee market? British roasters will be hoping we don’t see both a high market and a strong Dollar as this will not be good for GBP/MT coffee pricing.
Pound Sterling suffered both from Dollar Strength and Sterling weakness. On Thursday, the Pound went into freefall after comments in a Guardian interview with Bank of England (BoE) Governor Andrew Bailey revealed the Bank’s potential pivot towards a more Doveish stance. He said the Bank could become a “bit more aggressive” in cutting interest rates if UK inflation continues to ease. This prompted the Pound to slip to a three-week low against the Dollar and a two-week low against the Euro at 1.19. If the UK does cut rates, this could be offset by the Fed’s own rate cuts but with an election looming, who knows what Jerome Powell and his team will do?
