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

Coffee Market Report

03 Nov 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 40.12% within this market over the week of trade leading up to Tuesday 27th. October; to register a new net long position of 11,820 lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.78%, to register a net long position of 54,162 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market cut their net long position within the market by 37.71% to register a new net long position of 9,648 Lots which is the equivalent of 2,735,165 bags. This net long position has most likely been further decreased, following the period of mixed but overall sideways trade that has since followed. 

The National Coffee Institute of Costa Rica (ICAFE) have reported that the country’s coffee exports for the month of October were 77.15% higher than the same month last year, at a total of 17,416 bags. The October 2019 to September 2020 coffee year saw cumulative exports rise by 6.7% compared to the previous year at a total of 1,135,522 bags, despite disruptions caused by the Covid-19 pandemic. The beginning of the new coffee year coincides with the busiest harvest months with many farmers worried about the potential for labour difficulties due to travel restrictions that are still in place, preventing migrant workers crossing the borders.

The December 2020 to January 2021 contract arbitrage between the New York and London markets narrowed yesterday: to register this at 41.93 usc/Lb. This equates to 40.79% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange was seen to increase by 3,860 bags yesterday, to register these stocks at 1,152,585 bags, with 94% of these certified stocks being held in Europe at a total of 1,083,100 bags and the remaining 6% being held in the USA at a total 69,485 bags. There was meanwhile a smaller in number 2,173 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 64,981 bags.

It was a marginally firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Sugar market ended the day on a positive note, while the Cocoa and Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.7368% higher; to see this index registered 410.8400.   The day starts with the U.S. Dollar steady, trading at 1.294 Sterling, at 1.166 the Euro and with the US Dollar buying 5.743 Brazilian Real. 

The New York and London markets started the day yesterday trading on a modest positive note, both markets continued on this positive path for most of the morning trade before coming under a small degree of selling pressure in the late morning session. As the afternoon progressed the markets continued to oscillate around par before coming under large degree of selling pressure late in the day to see both markets settle near to the lows of the day.

The London market ended the day with on a modest negative note with 60% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 78.05% of the earlier losses of the day intact. This softer close, with the New York settling near to the lows of the day, does little to inspire confidence 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.   

JAN 1342 – 9                                                           DEC    102.80 – 1.60
MAR   1351 – 8                                                              MAR   105.35 – 1.50
MAY   1363 – 5                                                               MAY  107.10 – 1.50
JUL   1380 – 3                                                                 JUL    108.80 – 1.50
SEP     1397 – 3                                                                SEP    110.30 – 1.40
NOV    1415 – 2                                                               DEC   112.05 – 1.30
JAN    1431 – 2                                                               MAR   113.65 – 1.20
MAR    1448 – 2                                                               MAY   114.75 – 1.20