ICE

ICE certified arabica coffee stocks fall to lowest in 24 years

Credit: REUTERS/DARREN WHITESIDE

By Marcelo Teixeira

NEW YORK, Nov 1 (Reuters) - The amount of arabica coffee stored at certified warehouses of the Intercontinental Exchange (ICE) ICE.N fell on Wednesday to 380,033 60-kg bags, the lowest level in 24 years, according to data from the exchange and information compiled by Reuters.

ICE said in a daily report on Wednesday that the certified stocks had decreased by 9,105 bags, and that there was no coffee recently delivered pending the grading process for approval to enter the certified stocks.

The low volume of stocks at the exchange is usually an indication that the physical market is pricing the commodity at higher levels than those seen at the exchange.

It shows that there is no financial incentive for traders to deliver coffee at the expiration of arabica futures at ICE KCc1, KCc2.

Most of the current certified stocks are of coffee coming from Honduras (256,119 bags) and Brazil (101,184 bags).

As a comparison, Honduras coffee, which can be delivered at par, is currently quoted in the market at between 9 cents and 15 cents per pound above futures COF-WARB-HNHDF, COF-WARB-HNSDF, while Brazilian washed arabica coffee, which has a discount of 6 cents to be delivered, is quoted at 12 cents above COF-WARB-BRDIF.

The last time a smaller amount of certified stocks was on the market was April 1999, only three years after the exchange started accepting physical deliveries of coffee on traders' positions in futures.

(Reporting by Marcelo Teixeira in New York Editing by Matthew Lewis)

((marcelo.teixeira@tr.com; +1 332 220 8062; Reuters Messaging: marcelo.teixeira.thomsonreuters.com@reuters.net - https://twitter.com/tx_marcelo))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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