Coffee Market Analysis Report (28-31 October 2024)
Over the final days of October, both the New York Arabica and London Robusta coffee markets reflected significant movements influenced by speculative trading activity, certified stock adjustments, and global commodity trends. The report below provides a detailed account of the market’s dynamics, with a focus on data and trends observed daily throughout this period.
Certified coffee stock movements
New York Arabica Stocks:
– October 28: Certified washed Arabica stocks increased by 3,374 bags to 843,284 bags, with 97.86% held in Europe (825,230 bags) and 2.14% in the USA (18,054 bags). Of these, Brazilian washed Arabica accounted for 47.56%, and Nicaraguan coffee for 15.89%.
– October 29: A decrease of 3,885 bags lowered total stocks to 839,399 bags, with a similar composition—Brazil at 47.35% and Nicaragua at 15.97%.
– October 30: Stocks declined by another 4,385 bags, reaching 835,014 bags, where Brazil comprised 47.07% and Nicaragua 16.06%.
– October 31: Stocks saw a sharp increase of 14,539 bags, reaching 849,553 bags, with 97.87% in Europe and 2.13% in the USA. Brazilian coffee remained predominant at 47.54%, followed by Nicaragua at 15.97%.
London Robusta Stocks:
– October 28: Certified Robusta stocks declined by 9,167 bags to 660,833 bags, indicating a tighter Robusta supply in the northern hemisphere consumer markets.
Pending Grading Stocks:
– New York’s pending grading stocks fluctuated throughout the week, starting with a rise of 2,651 bags on October 28 to 118,437, decreasing by 7,040 bags on October 29, then increasing sharply by 16,705 bags on October 30 to 128,102, before finally decreasing by 17,747 bags on October 31 to 110,355.
Commitment of traders data
New York Arabica:
– Speculative Sector: The Non-Commercial Speculative sector reduced its net long position by 4.73% on October 28, ending at 38,731 lots (equivalent to 10,980,067 bags).
– Managed Money Funds: Increased net long positions by 0.15%, reaching 56,288 lots by October 29. The Index Fund sector also saw a rise, growing by 3.74% to 53,804 lots.
London Robusta:
– Managed Money Sector: Reduced net long positions by 20.99% on October 28, ending at 23,273 lots (3,878,833 bags), indicating a shift in speculative interest away from the Robusta market.
PRICE ARBITRAGE BETWEEN NEW YORK AND LONDON
The December 2024 New York Arabica to January 2025 London Robusta arbitrage experienced daily variations:
– October 28: Narrowed to 48.32 Usc/Lb, equating to a 19.45% price discount for Robusta.
– October 29: Marginally narrowed to 48.14 Usc/Lb, with a 19.07% discount.
– October 30: Widened to 48.61 Usc/Lb, reflecting a 19.59% discount.
– October 31: Narrowed again to 47.62 Usc/Lb, yielding a 19.08% discount.
COMMODITY MARKET PERFORMANCE AND CURRENCY MOVEMENTS
The commodity markets exhibited mixed trends, with oil prices rising throughout this period, adding upward pressure to several agricultural commodities:
– Firm commodities: Coffee, cocoa, sugar, wheat, gold, and platinum frequently ended on positive notes, while silver, corn, soybean, and palladium showed weakness.
– Exchange Rates: The U.S. Dollar was relatively stable, trading between 1.295 and 1.300 GBP, and 1.079 to 1.085 EUR. The USD to Brazil Real exchange saw minor fluctuations, closing at 5.762 BRL on October 31.
GLOBAL COFFEE EXPORT INSIGHTS
Costa Rica’s National Coffee Institute (ICAFE) reported a 1.6% increase in exports, totaling 1.02 million bags for the 2023/2024 coffee year. Projections for the 2024/2025 season indicate a further 6% growth, likely reaching 1.31 million bags. This uptick underscores potential increases in Central American coffee availability, which may impact global supply dynamics.
DAILY MARKET DYNAMICS AND TRADING ACTIVITY
– October 28: Both New York and London markets exhibited early gains, with New York showing strong speculative support, closing with 89.40% of the day’s gains intact, while London ended with 83.15%.
– October 29: Continued firm performance, driven by speculative buy stops in New York. The day closed with New York retaining 54.48% of gains and London 72.22%.
– October 30: A softer day, marked by selling pressure and speculative exits. New York closed with 94.44% of the day’s losses intact, and London with 82.54%.
– October 31: Both markets experienced strong support, with speculative short covering in New York, concluding with 61.22% of New York’s gains intact and London at 71.43%.
CONCLUSION
This period saw high volatility in both Arabica and Robusta markets, driven by fluctuations in speculative positions, certified stock levels, and currency exchange rates. The increase in Costa Rica’s coffee exports further added to the market’s supply-side considerations. Overall, the data from October 28–31 highlights a blend of bullish and bearish forces, providing critical insights for traders and investors in the coffee market. This comprehensive analysis allows stakeholders to make informed trading decisions based on recent market trends and underlying fundamentals.
