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

Coffee Market Report

21 Jan 2021

The Coffee Board of India have released their post monsoon estimate for the present October 2020 to September 2021 coffee crop to be 14.76% or 733,333 bags higher than the previous October 2019 to September 2020 coffee year, at a total of 5.7 million bags. This increase in production is related to the recovery of the coffee crop from the excessive and often damaging rains experienced in the country’s coffee states of Karnataka and Kerala last year.

In this respect the Coffee Board foresee that the new robusta coffee crop shall be 13.74% or 483,333 bags higher than the October 2019 to September 2020 robusta coffee crop at a total of 4 million bags, while they likewise foresee that the new arabica coffee crop shall be 17.24% or 250,000 bags higher than the October 2019 to September 2020 arabica coffee crop at a total of 1.45 million bags. There have in the meantime been some reports of unseasonal rainfall across the arabica districts, which should these have been significant rains, could lead to delayed harvesting, a degree of crop loss, and possibly a lower revision of total production in the months to come.

The March 2021 to March 2021 contract arbitrage between the London and New York markets narrowed yesterday: to register this at 64.42 usc/Lb. This equates to 51.45% 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 14,795 bags yesterday, to register these stocks at 1,556,920 bags, with 94.6% of these certified stocks being held in Europe at a total of 1,472,644 bags and the remaining 5.4% being held in the USA at a total 84,276 bags. There was meanwhile a larger in number 18,444 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 102,143 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 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 0.2681% higher; to see this index registered 471.4042. The day starts with the U.S. Dollar, trading at 1.369 Sterling, at 1.214 the Euro and with the US Dollar buying 5.292 Real.

The New York and London markets started the day yesterday trading on a softer note, both markets continued on this softer path for the remainder of the early morning session. As the afternoon progressed the markets briefly attracted buying support to trend firmer before dropping back from the highs of the session to be set on a softer path for the late afternoon trade. The New York and London markets soon after hit a floor for the day limiting the losses to see both markets recover to a degree and settle on negative notes for the day.

The London market ended the day on a negative note with 50% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 52% of the earlier losses of the day intact. The softer does little to indicate direction for the day today, and one might think the markets are set for a follow through hesitant start to early trade today, against the prices set yesterday, as follows:

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

MAR 1340 – 8                                          MAR 125.20 – 1.95
MAY 1350 – 8                                          MAY 127.30 – 1.95
JUL 1363 – 9                                            JUL 129.20 – 1.90
SEP 1382 – 9                                            SEP 131.00 – 1.90
NOV 1400 – 9                                           DEC 133.05 – 1.80
JAN 1413 – 10                                         MAR 134.85 – 1.80
MAR 1427 – 11                                       MAY 135.65 – 1.75
MAY 1441 – 12                                       JUL 136.35 – 1.70