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

Coffee Market Report

28 Aug 2020

The analysts Safras & Mercado have estimated that almost 95% of the new Brazil coffee crop has already been harvested, with the Conilon harvest now completed. This based on the Safras & Mercado forecast for a new crop of 68 million bags, the report would indicate that so far approximately 65 million bags of the new crop have been harvested. The Conilon robusta areas completed, which Safras estimate to have come in at 20 million bags and the arabica areas still in harvest, with an estimated 45 million bags completed.

August in Brazil’s Coffee Producing areas is historically one of the lowest rainfall months of the year, this year was no different with most areas receiving around average rainfall for the month. The Brazil coffee belt is forecast to remain dry for the next week to ten days, with the chance of isolated light rains falling between Espirito Santo and South of Bahia.

The November to December contract arbitrage between the London and New York markets broadened yesterday; to register this at 58.62 usc/Lb. This equates to 47.91% 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 19,503 bags yesterday to register these stocks at 1,287,647 bags, with 94% of these certified stocks being held in Europe at a total of 1,210,852 bags and the remaining 6% being held in the USA at a total of 76,795 bags. There is meanwhile a smaller in number 2,315 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,915 bags.

It was a marginally firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive sideways track for the day. The Sugar, Cocoa and New York Arabica Coffee markets ended the day on a positive note, while the London Robusta Coffee market ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.2717% higher; to see this index registered at 409.8350. The day starts with the U.S. Dollar steady, trading at 1.326 to Sterling, at 1.187 to the Euro and with the US Dollar buying 5.570 Brazilian Real.

The London and New York markets started the day yesterday trading on around, both markets started to attract a degree of selling pressure to see the markets set on a softer track into the early afternoon trade. As the afternoon progressed both the New York and the London markets recovered from the earlier losses of the day, however this support was short lived, and both markets dropped back onto a negative track for the afternoon. The New York market bounced off the lows of the day to see the market settle on a positive note for the day, while the London market also recovered marginally to see the market close on a softer note for the day.

The London market ended the day on a negative note and with 64.71% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 29.41% of the earlier gains of the day intact. This mixed close does little to indicate direction and one might think the markets are due for little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

SEP 1498 – 23                                                                    SEP 122.95 + 0.15
NOV 1405 – 22                                                                  DEC 122.35 + 0.25
JAN 1413 – 22                                                                   MAR 123.70 + 0.20
MAR 1426 – 19                                                                 MAY 124.80 + 0.35
MAY 1440 – 16                                                                 JUL 125.75 + 0.50
JUL 1453 – 14                                                                   SEP 126.40 + 0.55
SEP 1465 – 14                                                                   DEC 127.30 + 0.60
NOV 1478 – 14                                                                 MAR 128.30 + 0.70