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

Coffee Market Report

29 Sep 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 decrease their net long position by 14.31% within this market over the week of trade leading up to Tuesday 22nd. September; to register a new net long position of 44,416 lots. Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 2.51%, to register a net long position of 62,439 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market decreased their net long position within the market by 9.67% to register a new net long position of 32,094 Lots which is the equivalent of 9,098,507 bags. This net long position has most likely been decreased, following the period of mixed but overall softer trade that has since followed. 

With the month of September coming to a close and with the shipment statistics already at hand, the Vietnam General Statistics office have estimated that the coffee exports for the month of September shall be 8.3% higher than the same month last year, at a total of approximately 1,666,667 bags.  This they say, shall result in the countries coffee exports for the first nine months of this year to be 1.4% lower than the same period last year, at a total of 20,833,333 bags.

The General Statistics office of Vietnam have at the same time estimated that the value of the country’s coffee exports for the first nine months of this year, shall be 1% lower than the same period last year, at a total of approximately 2.16 billion US Dollars.

The November to December contract arbitrage between the London and New York markets narrowed yesterday; to register this at 49.36 usc/Lb. This equates to 45.06% 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 550 bags yesterday to register these stocks at 1,101,886 bags, with 93.80% of these certified stocks being held in Europe at a total of 1,033,323 bags and the remaining 6.20% being held in the USA at a total of  68,563 bags.  There was meanwhile a larger in number 2,560 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 12,996 bags. 

It was a neutral day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Cocoa market ended the day on a positive note, while the Sugar and Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.3501% higher; to see this index registered at 405.4258.   The day starts with the U.S. Dollar steady and showing some degree of buoyancy, trading at 1.285 Sterling, at 1.167 the Euro and with the US Dollar buying 5.661 Brazilian Real.

The New York and London market started the day yesterday trading on a close to par positive note, both markets continued to trade around par for most of the morning session. As the afternoon progressed both the London and the New York market came under a degree of selling pressure to see both markets trend softer for the early afternoon session. The late afternoon session saw both the London and the New York markets continue on a softer path to settle near to the lows of the day.

The London market ended the day with on a negative note with 93.93% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 82.82% of the earlier losses of the day intact. This very soft close, with both markets losing ground late in the day, does little to inspire confidence and with the Brazil Real showing further signs of weakness towards the US Dollar, one might think the markets are due for slightly better than a hesitant steady start to early trade, against the prices set on yesterday, as follows:   

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

NOV   1327 – 31                                                                DEC    109.55 – 4.10
JAN    1346 – 30                                                                MAR   111.25 – 3.95
MAR   1359 – 30                                                               MAY   112.70– 3.90
MAY   1374 – 29                                                                JUL    114.10 – 3.80
JUL     1390 – 27                                                                SEP    115.15 – 3.80
SEP    1407 – 25                                                                DEC    116.25 – 3.75
NOV   1424 – 23                                                               MAR   117.40 – 3.65
JAN    1440 – 23                                                                MAY   118.25 – 3.60