May 05, 2024

Wkly Coffee Market Recap & COT Numbers to 03 May 24

By Oliver Broster

New York

A big move in NY and the market was down 23.25 c/lb. on the week (-10.71%).  Given the size of the move it is surprising that the open interest (OI) through to close of business on Thursday was only down -158 lots.  Volume was higher than last week but remains lower in the weeks approaching the May’24 options expiry.  Both the spread and outright volume picked up significantly.

London

The moves in London were proportionally larger, the Jul24 contract was down by -610 / MT on the week (-14.70%).  Open Interest declined significantly during the course of the week indicating participants leaving the market -7,159 lots (-8.10 %).  Total volume in the market increased, driven by the outright volume however the spread volume was down on the previous week. 

Commitment Of Traders

New York

The managed money this week reduced their net long by -308 lots. (+365 lots long and +673 lots short) taking their total net position down to 69,648 lots. At the same time -9 trades left on the long side and 4 traders joined on the short side.  Their total net position still remains within the upper limits of historical levels over the last three years.   

The producer merchants reduced their net short position by 5,179 lots (- 463 lots long and -5,462 lots short) making their net short position -61,317 lots short.  As the PM short was reduced (theoretically the hedge by PM of a physical purchase from origin) it is reasonable to believe that Origin / producers have been slow to respond to this move.

It is important to remember that since the COT numbers were officially published the market has come off 15.90 c/lb.  At the same time OI only fell by -584 lots.  Given the size of the move and the speed this is surprising as it indicates not many participants are leaving the market. The OI figures for close of business Friday are not yet published.

London

The managed money reduced their position by -517 lots (-961 lots long and -444 lots short making their net position + 31,005 lots.  The reduction of this position over the last 4 weeks put them within normal parameters/ levels over the last three years. Net 1 Managed Money trader joined on the long side and -1 left the short side. 

At the same time the producer merchants reduced their net short position by +1,164 lots (-1,306 lots long and -2,470 lots short) making their net short position -41,387 lots.  Again, the implication being that industry had not responded in size to the move lower as per the COT reporting cut off.

In comparison with the same time last year both the PM long and short remain well behind where they were last year, it also has to be taken into consideration that last year was already exceptional.

Again since the COT numbers cut off we have moved $-480 / MT and the open interest through to Thursday declined by -4.692 lots.  At the same time with the exception of Thursday volumes were not especially elevated. 

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  • Weekly Coffee Market Recap and Commitment of Traders Numbers (Wk ending 07/06)

    New York

    Another strong week in New York (the fifth positive week in a row) the market closed + 3.65 c/lb. (+1.65%).  A big day on Fridays as the market moved from 232.50 c/lb to 224.70 c/lb ( -7.80 c/lb.) this was on much higher volume than during the rest of the week.  Open Interest (OI) through to Friday increased + 13,605 lots (+5.53%), it will be interesting to observe the OI numbers for Friday which will be released early in the afternoon (UK time) on Monday.

    The volume increased by 62% in comparison with the previous week.  The major change being the increase in the spread activity during the week.  At the same time the OI in the first position fell from 88,373 lots (31/05) to 78,456 lots (06/06) a decline of 9,917 lots.  This within the context of an increase in the overall OI of 13,605 lots.

    London

    The move in London was stronger than in NY and the market closed up + $ 141 /MT (3.54%).  This was the fourth consecutive week of gains in London.  Open interest was up through to Thursday +4,053 lots confirming increasing participation in the move, and whilst there was a significant sell off on Friday from an open of $4,280 / MT to a close of $4,125 / MT down - $ 155/ MT, the volume was not elevated. 

    Volume was up 20% on the previous week and again the major contributor to this was the spread volume which increased +36.34% in comparison with the previous week. 

    Coffee Comitment of Traders

    New York

    The Managed Money (MM) increased their long position during the week by +6,207 lots (+4,635 lots long and – 1,572 lots short) making them net long +63,220 lots long.  8 MM traders joined on the long side and 2 MM traders joined on the short side.  Earlier this year we reached a high of net long +72,818 lots on the 16/04, the current reporting number is the 5th highest / ranked since Jan ’22, all higher occurrences occurred in Apr’24.  The implication being that the probability of MM further increasing their long (whilst not implausible) is declining. 

    At the same time the Producer Merchants increased their net short by -4,229 lots (+5,310 lots long and + 9,539 lots short) making the PM Net short -59,702 lots. 

    In comparison with the same period last year:-

    London

    The MM increased their net long position by +3,029 lots (+2,811 lots long and -218 lots short, making them net long +28,625 lots long. 

    The PM increased their net short position selling -2,299 lots (-2,266 lots long and + 33 lots short) making their net position -32,735 lots short.

    In comparison with same period last year:-

    Unlike in New York both the PM Long and short remain behind where they were at the same time last year and the PM Short (hedges of purchases from origin) remains significantly behind.

     

     

     

     

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