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

Coffee Market Report

17 Jan 2020

The Brazil Governments Crop Supply Agency have reported that they foresee that the next 2020 new Brazil crop and due to positive biennial bearing factors for the arabica coffee farms shall be between 57.15 million and 59.6 million bags. The Conab forecasts are traditionally very conservative and many would therefore see this as an indication that the new 2020 Brazil coffee crop might still be even closer to the all-time record output of 61.65 million bags in 2018, as some others have already forecast.

The report also assesses that the land under coffee in Brazil increased by 4% up to 1.88 million hectares, the report also indicated that drier and hotter than normal weather has occurred after the main flowering period late last year which would indicate there may be a reduction in potential yields.

The March to March contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 53.35 usc/Lb. This equates to 47.23 % 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 11,980 bags yesterday; to register these stocks at 2,102,128 bags, with 88.6% of these certified stocks being held in Europe at a total of 1,863,163 bags and the remaining 11.4% being held in the USA at a total of 238,965 bags. There was meanwhile a smaller in number decrease by 11,772 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 130,569 bags.

The commodity markets were mixed in trade yesterday, to see overall macro commodity index taking a soft sideways track for the day. The Oil and Cocoa markets ended the day on a positive note, while the Natural Gas, Sugar, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.7802% lower; to see this index registered at 417.3993 The day starts with the U.S. Dollar steady, trading at 1.307 to Sterling, at 1.114 to the Euro and with the US Dollar buying 4.185 Brazilian Real.

The London and New York markets started the day yesterday trading close to par on a modest positive note, both markets maintained this positive stance into the early afternoon trade. As the afternoon both the London and the New York markets started to attract selling pressure to drop back from the highs of the day and close on a negative note.

The London market ended the day on a negative note, and with 86.67% of the earlier losses of the day intact, while the New York market ended the day on likewise negative note, and with 73.68% of the earlier losses of the day intact. This soft close for the markets does little to inspire confidence and one might expect the markets are due little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

MAR 1314 – 13                                                                   MAR 112.95 – 1.35
MAY 1333 – 13                                                                   MAY 115.25– 1.40
JUL 1353 – 13                                                                     JUL 117.55 – 1.35
SEP 1372 – 13                                                                    SEP 119.65 – 1.40
NOV 1391 – 12                                                                   DEC 122.30 – 1.35
JAN 1409 – 11                                                                     MAR 124.70 – 1.30
MAR 1431 – 10                                                                   MAY 125.85 – 1.20
MAY 1454 – 10                                                                   JUL 126.85 – 1.05
JUL 1477 – 10                                                                     SEP 127.75 – 0.95