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

 

I. & M. Smith (Pty) Ltd.

Coffee Market Report

26 Jan 2021

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 increase their net long position within this market by 52.10% over the week of trade leading up to Tuesday 19th. January; to register a new net long position of 24,483 lots. Meanwhile the longer term in nature Index Fund sector of this market raised their net long position within the market by 4.96%, to register a net long position of 71,838 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market increased their net long position within the market by 47.65% to register a new net long position of 23,646 Lots which is the equivalent of 6,703,536 bags. This net long position has most likely been increased, following the period of mixed but overall firmer trade that has since followed.  

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this market increase their net short position within the market by 37.12% over the week of trade leading up to Tuesday 19th. January: to register a new net short sold position of 9,836 Lots which is the equivalent of 1,639,333 bags. This net short sold position has most likely been further increased, following the period of firmer trade that has since followed.

There are now only thirteen trading days to the fore for the Vietnamese coffee industry, prior to the country closing down for the week-long Tet New Year holidays, which shall start on the 12th February and to bring in the year of the Buffalo. Historically farmers used to become aggressive sellers of new crop coffee stocks ahead of the festivities so as to finance the celebrations, in recent years however and with income from alternative crops, this tendency has lessened to an extent, and one might anticipate that selling activity will be met with some degree of internal market price resistance, and not a flood of new crop coffee coming to the market in the coming weeks.

The March 2021 to March 2021 contract arbitrage between the London and New York markets narrowed yesterday: to register this at 63.88 usc/Lb. This equates to 51.83% 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 13,424 bags yesterday, to register these stocks at 1,602,404 bags, with 94.7% of these certified stocks being held in Europe at a total of 1,517,728 bags and the remaining 5.3% being held in the USA at a total 84,676 bags. There was meanwhile a smaller in number 11,075 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 95,324 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, 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 0.6226% higher; to see this index registered 468.5053. The day starts with the U.S. Dollar, trading at 1.365 Sterling, at 1.213 the Euro and with the US Dollar buying 5.467 Real.

The New York and London markets started the day yesterday trading on a modest firmer note, the markets hovered around par for most of the morning session. As the afternoon progressed the New York market attracted a degree of selling pressure to see the market fall back from the highs of the morning and set on a softer path, the market soon hit a floor limiting the losses for the day. The London market followed suit in a more sedate manner to also hit a floor and limit the losses for the day. Both the New York and the London markets settled on a softer note at the close.

The London market ended the day on a modest negative note with 11.11% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 42.10% of the earlier losses of the day intact. This narrowly negative close does little to indicate direction, albeit that both markets recovered most of the earlier in the day losses, one might think that the markets are due for a hesitant start to early trade today, against the prices set yesterday, as follows:

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

MAR 1309 – 1                                          MAR 123.25 – 0.80
MAY 1318 – 4                                          MAY 125.40 – 0.80
JUL 1332 – 6                                            JUL 127.35 – 0.75
SEP 1348 – 9                                            SEP 129.15 – 0.75
NOV 1365 – 10                                         DEC 131.15 – 0.70
JAN 1379 – 8                                           MAR 133.00 – 0.65
MAR 1395 – 5                                         MAY 133.85 – 0.55
MAY 1408 – 4                                          JUL 134.55 – 0.50