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

Coffee Market Report

05 Aug 2020

The National Coffee Institute of Costa Rica have reported that the country’s coffee exports for the month of July were 13.13% higher than the same month last year, at a total of 139,022 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 equal to the same period in the previous coffee year, at a total of 980,731 bags.

The International Coffee Organisation ICO have reported that the global coffee exports for the month of June were 5.27% lower than the same month last year, at a total of 10.57 million bags, according to their report is illustrates the consequent effects of covid-19 related lockdowns impacting supply chains through challenging logistics over these months with many producer countries still in the throes of lockdown restrictions, in contrast to many northern hemisphere consumer markets where regulations are easing. This lower export figure reported in the month of June, has contributed to the cumulative global coffee exports for the first nine months of the present October 2019 to September 2020 coffee year to be 5.08% lower than the same period in the previous coffee year, at a total of 95.36 million bags.

The Colombian Coffee Growers Federation have come forth to report that they foresee production over the main harvest to come, which is due to start in October this year, to reach around 7,8 million bags, with climate thus far conducive to indicate that this, largest washed arabica producer is on track, to meet their targeted production levels of around 14 million bags for the October 2020 to September 2021 coffee year.

The November to December contract arbitrage between the London and New York markets widened yesterday; to register this at 60.58 usc/Lb. This equates to 49.07% 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 49,949 bags yesterday to register these stocks at 1,537,642 bags, with 94.1% of these certified stocks being held in Europe at a total of 1,447,039 bags and the remaining 5.9% being held in the USA at a total of 90,603 bags. There is meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 18,833 bags over the weeks of trade leading up to Monday 3rd. August, to see these stocks registered at 1,848,500 bags, on the day.

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 Coffee and Sugar markets ended the day on a positive note, while the Cocoa market ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.4283% higher; to see this index registered at 398.6381. The day starts with the U.S. Dollar steady, trading at 1.309 to Sterling, at 1.181 to the Euro and with the US Dollar buying 5.290 Brazilian Real.

The London and New York markets started the day yesterday trading on a close to par neutral note, both markets soon attracted buying support to see the markets turn positive in the early morning trade. As the afternoon progressed both the London and New York markets buoyed by further buying support continued to trend positive for the day to see both markets settle near the highs of the day.

The London market ended the day on a very positive note and with 92.31% of the earlier gains of the day intact, while the New York market ended the day on a likewise very positive note and with 95.16% of the earlier gains of the day intact. The technical activity on the floor is buoyed by a general resurgence in speculative interest within the commodities sector, and in the coffee markets combined with trend based oscillations to see another hefty day in volume terms on both markets yesterday. This firmer close might inspire some degree of confidence to possibly set the markets for a follow-through steady start for early trade today, against the prices set yesterday, as follows:

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

SEP 1404 + 53                                                                       SEP 121.05 + 3.15
NOV 1386 + 36                                                                     DEC 123.45 + 2.95
JAN 1396 + 33                                                                      MAR 125.35 + 3.05
MAR 1410 + 33                                                                    MAY 126.30 + 3.10
MAY 1427 + 34                                                                    JUL 126.85 + 2.85
JUL 1446 + 37                                                                      SEP 127.20 + 2.60
SEP 1462 + 38                                                                      DEC 128.05 + 2.35
NOV 1478 + 39                                                                    MAR 129.05 + 2.10