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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

18 Dec 2020

Brazil’s government food supply and statistics agency CONAB have come forth to report that Brazilian Coffee producers due to positive biennial bearing factors for the arabica coffee farms are forecast to produce 63.08 million bags of coffee for the July 2020 to June 2021 crop year. This estimate has been revised upwards by 2.36% from their previous estimate of 61.62 million bags released in September this year. CONAB has revised their projections for arabica coffee production upwards by 3.17% from their last estimate to now be forecast at a total of 48.80 million bags, while Robusta Production was also revised upwards by 0.70% from their last estimate to now be forecast at a total of 14.30 million bags.

The CONAB forecasts are traditionally very conservative and many would therefore see this as an indication that the 2020 Brazil coffee crop is likely to have come in at around the 70 million bag mark that has already been forecast by independent industry surveys and is, with the harvest now complete, looking to be closer to reality.

The report also assesses that the land under coffee in Brazil increased by 3.9% during 2020 from the previous year, up to 1.88 million hectares, additionally indicating that farmers are utilising resources such as irrigation systems and mechanized harvesting, a combination that should improve yields through increased inputs and lower costs through mechanisation.

The January 2021 to March 2021 contract arbitrage between the London and New York markets narrowed yesterday: to register this at 63.69 usc/Lb. This equates to 50.31% 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 4,056 bags yesterday, to register these stocks at 1,371,566 bags, with 94.1% of these certified stocks being held in Europe at a total of 1,290,147 bags and the remaining 5.9% being held in the USA at a total 81,419 bags. There was meanwhile a larger number 8,100 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 70,310 bags.

It was a 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, Cocoa and London Robusta Coffee markets ended the day on a positive note, while the New York Arabica Coffee market remained unchanged on the day. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.9451% higher; to see this index registered 448.6980.  The day starts with the U.S. Dollar, trading at 1.352 Sterling, at 1.224 the Euro and with the US Dollar buying 5.058 Real. 

The New York and London markets started the day yesterday trading on a modest positive note, both markets continued on this positive track for the remainder of the morning session. As the afternoon progressed the markets hit a ceiling to limit the gains for the day and see both the New York and London market set on a softer track for the day. Late in the afternoon session saw the New York market oscillate around par and settle unchanged for the day, while the London market was seen to settle on a modest positive note for the day.

The London market ended the day on a modest positive note with 75% of the earlier gains of the day intact, while the New York market remained unchanged on the day. This neutral close does little to indicate direction and one might think that the markets are possibly due for a hesitant steady start to early trade today, against the prices set yesterday, as follows:


MAR 1387 + 9                                   MAR 126.60 Unch
MAY   1393 + 5                                     MAY   128.50 + 0.05
JUL 1407 + 4                                      JUL 130.05 + 0.05
SEP   1422 + 3                                      SEP    131.35 Unch
NOV    1437 + 2                                    DEC     132.75 Unch
JAN   1452 + 1                                      MAR    134.00 – 0.05
MAR 1466 + 4                                      MAY   134.55 – 0.10
MAY  1484 + 5                                      JUL   135.10 – 0.10