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

 

I. & M. Smith (Pty) Ltd.

Coffee Market Report

01 Mar 2021

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increase their net long position by 82.10% within the market over the week of trade leading up to Tuesday 23rd. February: to register a net long position of 35,426 which is the equivalent of 10,043,114 bags. This net long position has most likely been drastically increased decreased, following the period of 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 switch their net short position within the market to a new long position over the week of trade leading up to Tuesday 23rd. February: to register a new net long position of 11,664 Lots which is the equivalent of 1,944,000 bags. This position has most likely been switched to a new net long position, following the period of firmer trade has since followed.

With the month of February now closed and with the shipment statistics already at hand, the Vietnam General Statistics office have estimated that the coffee exports for the month of February shall be 41% lower than the same month last year, at a total of approximately 1,833,333 bags.  This they say, shall result in the countries coffee exports for the first two months of this calendar year to be 18.50% lower than the same period last year, at a total of 4,516,667 bags.

This comparatively lower export performance month on month during February from Vietnam can be attributed to the low period of activity within the interior over the festive Tet Lunar New Year, observed in February this year. One might anticipate an increase in coffee exports to flow to the consumer markets in the coming month as commercial activity gains momentum, subsequent to the February weeks’ celebrations.

The General Statistics office of Vietnam have at the same time estimated that the value of the country’s coffee exports for January, shall be 21.22% lower the same month last year, at a total of approximately 193 million US Dollars.

The Indonesian government trade data from Sumatra, which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of February were 146,010 bags or 76.61% lower than the same month last year, at a total of 44,583 bags. This contributes to the islands cumulative robusta coffee exports for the first five months of the October 2020 to September 2021 coffee year to be 304,925 bags or 21.01% lower than the same period in the previous year, at a total of 1,146,258 bags.

The May-to-May contract arbitrage between the London and New York markets narrowed on Friday: to register this at 70.69 usc/Lb. This equates to 51.41% 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 9,501 bags on Friday, to register these stocks at 1,771,916 bags, with 94.5% of these certified stocks being held in Europe at a total of 1,675,161 bags and the remaining 5.5% being held in the USA at a total 96,755 bags. There was meanwhile a larger in number 13,451 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 81,093 bags.

It was a neutral day overall on the commodity markets on Friday, to see the overall macro commodity index taking something of a sideways track for the day. The Cocoa market ended the day on a positive note, while the Sugar and Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.96% lower; to see this index registered 497.14. The day starts with the U.S. Dollar, trading at 1.398 Sterling, at 1.208 the Euro and with the US Dollar buying 5.599 Real.

The New York and London markets started the day on Friday trading close to par on a modest firm note, both markets quickly attracted a degree of selling pressure to see the markets trend softer for the remainder of the morning session. As the afternoon progressed the New York and London markets buoyed by buying support recovered from the earlier in the day losses to see the markets set on a firmer track for the early afternoon session, this was however short lived as the markets soon hit a ceiling to limit the gains and see the markets set on a softer track to the close.

The London market ended the day on a modest negative note with 12% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 56.67% of the earlier losses of the day intact. This softer close, albeit that the markets recovered from the earlier in the day losses, does little to indicate direction and one might think that the markets are due for little better than a hesitant steady start for early trade today, against the prices set on Friday, as follows:

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

MAY 1473 – 3                                             MAY 137.50 – 2.55
JUL 1490 – 5                                               JUL 139.30 – 2.55
SEP 1504 – 6                                               SEP 140.90 – 2.60
NOV 1517 – 7                                              DEC 142.25 – 2.65
JAN 1530 – 7                                               MAR 143.30 – 2.60
MAR 1546 – 7                                             MAY 143.75 – 2.55
MAY 1562 – 7                                              JUL 144.15 – 2.55
JUL 1578 –  7                                              SEP 144.55 – 2.50