I. & M. Smith (Pty) Ltd. since 1915
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I. & M. Smith (Pty) Ltd.

Coffee Market Report

04 Aug 2020

The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market cut their net short sold position within this market by 72.70% over the week of trade leading up to Tuesday 28th. July; to register a new net short position of 6,093 lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 7.51%, to register a net long position of 50,021 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market cut their net short sold position within the market by 68.40%, to register a new net short position of 6,412 Lots which is the equivalent of 1,817,774 bags. This net short position has most likely been further decreased, following the period of positive trade that has since followed.

The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of June were 78,745 bags or 18.73% higher than the same month last year, at a total of 420,373 bags. This has contributed to the country’s cumulative coffee exports for the first nine months of the present October 2019 to September 2020 coffee year to have been 663,963 bags or 17.52% higher than the same period in the previous coffee year, at a total of 3,788,979 bags. By comparing quantity of coffee exported by type in June this year compared to the same month of last Coffee Year, Robusta increased in quantity by 25.60% to total 344,438 bags, Arabica exports lso registered a decrease in quantity of 10.67% to total 75,935 bags.

The National Coffee Institute of Honduras have reported that the country’s coffee exports for the month of July were 55.50% lower than the same month last year, at a total of 310,288 bags. This they say has contributed to the cumulative coffee exports for the first ten months of the present October 2019 to September 2020 coffee year to be 16.70% lower than the same period in the previous coffee year, at a total of 5,235,629 bags.

The November to December contract arbitrage between the London and New York markets widened yesterday; to register this at 59.27 usc/Lb. This equates to 49.19% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 7,038 bags yesterday to register these stocks at 1,587,591 bags, with 94.1% of these certified stocks being held in Europe at a total of 1,494,222 bags and the remaining 5.9% being held in the USA at a total of 93,369 bags. There is meanwhile a smaller in number 4,675 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags.

It was a firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive track for the day. The Cocoa and Sugar markets ended the day on a positive note, while the coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.5006% higher; to see this index registered at 396.9382. The day starts with the U.S. Dollar steady, trading at 1.307 to Sterling, at 1.177 to the Euro and with the US Dollar buying 5.320 Brazilian Real.

The London and New York markets started the day yesterday trading on a negative note, both markets maintained this soft stance into the early afternoon trade. As the afternoon progressed the New York market attracted a further degree of selling pressure to drop further into negative territory for the day. The London market followed suit in a more sedate manner. The New York market buoyed by buying support trended positive late in the afternoon session to see the market bounce off the lows of the day and close on a soft note, with the London market following suit in a more sedate manner.

The London market ended the day on a modest negative note and with 26.20% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 33.85% of the earlier losses of the day intact. This close does little to indicate directions, albeit that both the New York and London markets bounced back off the lows of the day, to possibly set the markets for a hesitant steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                                           NEW YORK ARABICA USc/Lb.

SEP 1351 + 7                                                                         SEP 117.90 – 1.05
NOV 1350 – 11                                                                      DEC 120.50 – 1.10
JAN 1363 – 12                                                                       MAR 122.30 – 0.85
MAR 1377 – 13                                                                     MAY 123.20 – 0.70
MAY 1393 – 13                                                                     JUL 124.00 – 0.60
JUL 1409 – 14                                                                       SEP 124.60 – 0.55
SEP 1424 – 16                                                                       DEC 125.70 – 0.50
NOV 1439 – 19                                                                     MAR 126.95 – 0.40