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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

27 Apr 2020

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increase their net long position within the market by 2.65% over the week of trade leading up to Tuesday 21st. April: to register a new net long position of 10,079 Lots which is the equivalent of 2,857,352 bags. This net long position has most likely been increased following the period of mixed but overall softer trade that 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 sold position within the market by 6.59% over the week of trade leading up to Tuesday 21st. April; to register a short-sold position of 35,080 Lots.  This net short sold position is the equivalent of 5,846,667 bags and has most likely been increased following the period of mixed but overall softer trade that has since followed.

The Colombian National Government has presented the agricultural sector, including coffee farmers, with a set of guidelines on how to take the precautions necessary to avoid the spread of the Covid-19 virus. This was necessary to continue with as little disruption as possible, the harvesting of the Mitaca midyear coffee crop which traditionally peaks harvest in the months of April and May each year. These guidelines are address the challenges associated with the provisions of labour as well as the access to inputs such as fertilizers, which have become increasingly difficult with the effects of the Covid-19 virus and social distancing policies that ensued soon after. These measures presented by the Colombian Government are in line with the provisions of the ministry of Health and with these in place all essential workers involved with the production, storage and transportation of agricultural goods will have the necessary knowledge to mitigate the risks of spreading the Covid-19 virus whilst performing key work functions to ensure that the flow of goods to consumer markets is disrupted as little as possible.

The July to July contracts arbitrage between the London and New York markets narrowed on Friday; to register this at 54.86 usc/Lb. This equates to 51.40% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 16,116 bags on Friday; to register these stocks at 1,848,196 bags, with 90.6% of these certified stocks being held in Europe at a total of 1,64,352 bags and the remaining 9.4% being held in the USA at a total of 173,844 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,460 bags. 

The commodity markets were softer in trade on Friday, to see the overall macro commodity index taking a softer sideways track for the day. The Oil, Copper and Orange Juice markets ended the day on a positive note, while the Natural Gas, Sugar, Cocoa, Coffee, Cotton, 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 1.2906% lower; to see this index registered at 327.9692. The day starts with the U.S. Dollar steady, trading at 1.248 to Sterling, at 1.085 to the Euro and with the US Dollar buying 5.591 Brazilian Real.

The New York and London markets started the day on Friday trading around on a negative note, both markets continued on this track into the early afternoon. As the afternoon progressed the London market attracted a degree of buying support to trend slightly positive only to hit a ceiling a drop into modest negative territory for the day. The New York market attracted further selling pressure to accentuate the losses for the day, to close on a very negative note for the day.

The London market ended the day on a modest negative and with 26.08% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 88.97% of the earlier losses of the day intact. This softer close does little to inspire confidence and with the Brazil Real weaker against the US Dollar once again one might expect the markets are due for little better than a hesitant steady start to early trade today, against the prices set on Friday, as follows:

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

JUL    1144 – 6                                                                     JUL    106.75 – 5.65
SEP    1167 – 4                                                                      SEP   107.85 – 5.45
NOV   1187 – 2                                                                     DEC   109.60 – 5.20
JAN    1205 – 1                                                                     MAR  111.25 – 5.05
MAR   1223 + 1                                                                    MAY  112.20– 5.00 
MAY 1240 + 1                                                         JUL 113.20 – 4.95
JUL    1257 + 1                                                                      SEP    114.25 – 4.90
SEP 1278 + 1                                                           DEC 115.85 – 4.85