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

Coffee Market Report

08 Dec 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 long position within this market by 8.61% over the week of trade leading up to Tuesday 1st. December; to register a new net long position of 15,001 lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 2.32%, to register a net long position of 61,246 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market raised their net long position within the market by 6.40% to register a new net long position of 16,204 Lots which is the equivalent of 4,593,762 bags. This net long position has most likely been further increased, following the period of mixed but overall firmer sideways trade that has since followed.

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of November was 63,000 bags or 4.18% lower than the same month last year, at a total of 1,443,000 bags. This has contributed to the countries cumulative production for the first two months of the present October 2020 to September 2021 coffee year to be 273,000 bags or 9.50% lower than the same period in the previous coffee year, at a total of 2,602,000 bags.

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of November were 109,000 bags or 9.38% higher than the same month last year, at a total of 1,271,000 bags. This has contributed to the country’s cumulative coffee exports for the first two months of the present October 2020 to September 2021 coffee year to be 61,000 bags or 2.57% lower than the same period in the previous coffee year, at a total of 2,312,000 bags.

The January 2021 to March 2021 contract arbitrage between the London and New York markets widened yesterday: to register this at 58.86 usc/Lb. This equates to 49.42% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,975 bags yesterday, to register these stocks at 1,298,868 bags, with 94% of these certified stocks being held in Europe at a total of 1,220,383 bags and the remaining 6% being held in the USA at a total 78,485 bags. There was meanwhile a larger number 10,155 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 88,319 bags.

It was a softer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a soft sideways track for the day. The Sugar and New York Arabica Coffee markets ended the day on a positive note, while the Cocoa and London Robusta Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.3755% lower; to see this index registered 435.2985.  The day starts with the U.S. Dollar, trading at 1.336 Sterling, at 1.212 the Euro and with the US Dollar buying 5.099 Real. 

The New York and London markets started the day yesterday trading modest soft note, both markets continued on this softer track for most of the morning session, before seeing the New York market begin to attract a small degree of buying support. As the afternoon progressed the New York market continued to trend in a positive manner to see the market settle near the highs of the day, while the London market hit a price floor and recovered some of the early losses of the day to see the market settle on a modest soft note for the day.

The London market ended the day on a modest negative note with 36% of the earlier losses of the day intact, while the New York market ended the day on a positive note with 77.50% of the earlier gains of the day intact. This mixed close does little to indicate direction, albeit that the New York market settled near to the highs of the day, to possibly set the markets for 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 1328 – 9                                                MAR 119.10 + 1.55
MAR   1350 – 5                                                      MAY   120.80 + 1.45
MAY   1361 – 6                                                     JUL 122.40 + 1.40
JUL   1378 – 6                                                       SEP    123.90 + 1.45
SEP    1395 – 5                                                       DEC     125.65 + 1.50
NOV   1411 – 5                                                      MAR    127.30 + 1.55
JAN   1426 – 5                                                       MAY   128.05 + 1.55
MAR   1441 – 5                                                       JUL   128.80 + 1.65