Speculative Movements and Coffee Market Trends as of September 2024

The latest Commitment of Traders (COT) report from the New York arabica coffee market reveals that the Non-Commercial Speculative sector reduced its net long position by 9.48% during the trading week leading up to Tuesday, September 3, 2024. The new net long position now stands at 39,101 lots, equivalent to 11,084,960 bags. This decline likely followed a period of mixed, but generally weaker, market activity.

Meanwhile, the London robusta coffee market saw an increase in speculative activity. The Speculative Managed Money Sector raised its net long position by 4.76%, resulting in a new position of 35,033 lots, or 5,838,833 bags. This position appears to have remained relatively stable, following a period of sideways movement in the market.

On the inventory front, certified washed arabica coffee stocks at the New York exchange increased by 9,055 bags, bringing total stocks to 843,847 bags. Of these, 97.73% (824,688 bags) are stored in Europe, while 2.27% (19,159 bags) are held in the USA. Notably, 46.97% (396,373 bags) of these certified stocks consist of Brazil’s washed arabica coffee, while 12.28% are from Honduras. On the same day, pending grading stocks decreased by 11,170 bags, leaving 43,792 bags awaiting certification.

On Friday, the arbitrage between the November 2024 contracts in the London and New York markets widened to 19.64 U.S. cents per pound, reflecting an 8.32% price discount for London robusta coffee compared to New York arabica.

Commodity markets, including oil, saw a general decline on Friday, with coffee markets in both New York and London following the same trend. The New York arabica, London robusta, and other key commodities like corn, soybeans, wheat, sugar, and metals all ended the day negatively, with cocoa being one of the few markets to show positive movement. As of the start of the day, the U.S. dollar was trading at 1.312 against the British pound, 1.107 against the euro, and 5.599 against the Brazilian real.

Friday’s trading sessions in both the New York and London coffee markets began under pressure. Prices fell below par early in the session, maintaining a downward trend as resistance levels were hit. As trading progressed, volumes increased, triggering speculative selling in New York and similar activity in London. This led to significant liquidations and exacerbated losses. Although the markets saw some recovery towards the end of the day, both markets closed on a soft note near their daily lows, retaining most of the earlier losses.

By the close, the London market had held onto 87.58% of its intraday losses, while the New York market retained 92.13% of its losses. This weak close suggests a cautious start for early trading today, based on the following Friday prices:

Huy Tran
KAIFarm Team®