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

Coffee Market Report

26 Jun 2020

With much of the current crop robusta coffee stocks within Vietnam sold and internal market price resistance slowing sales of the remaining stocks in hand, against the lower prevailing value in London; trade remains lacklustre within Vietnam for the present. Farmers will soon start to look toward the start of the new crop harvest that shall come at the end of the rain season, which traditionally comes to a close in October each year.

New crop coffees are flowing to the internal market within Indonesia at this time, the Indonesia robusta coffee harvest traditionally starts in April each year, and supply of new crop Indonesia Robusta Coffees has picked up once again this past week. This markets’ internal price resistance remains comparatively strong within Indonesia, spurred by the growing domestic roasting and instant coffee manufacturers who compete within the local market for similar coffees. This similarly creates tough competition for exporters, who hold forward commitments to supply consumer markets.

The September to September contract arbitrage between the London and New York markets narrowed yesterday; to register this at 43.46 usc/Lb. This equates to 45.37% 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 2,640 bags yesterday; to register these stocks at 1,663,243 bags, with 92.3% of these certified stocks being held in Europe at a total of 1,535,636 bags and the remaining 7.7% being held in the USA at a total of 127,607 bags. There was meanwhile a larger in number 3,601 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 33,952 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 and Cocoa markets ended the day on a positive note, while the Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.0511% higher; to see this index registered at 355.9083. The day starts with the U.S. Dollar steady, trading at 1.243 to Sterling, at 1.122 to the Euro and with the US Dollar buying 5.359 Brazilian Real.

The New York and London markets started the day trading on a modest close to par on a soft note, both markets maintained this neutral stance into the early afternoon trade. As the afternoon progressed the New York market started to attract a selling pressure on the back of a weaker Brazil Real, the London market soon followed suit. Late in the afternoon session saw both the London and New York markets slip back into deeper negative territory where both markets would settle for the day.

The London market ended the day on a negative note and with 81.82% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 38.10% of the earlier losses of the day intact. This negative close does little to indicate confidence or direction and one might think the markets are due for 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.

SEP 1154 – 22                                                                       SEP 95.80 – 2.00
NOV 1174 – 20                                                                     DEC 98.25 – 1.80
JAN 1192 – 21                                                                      MAR 100.40 – 1.75
MAR 1211 – 20                                                                     MAY 101.75 – 1.80
MAY 1231 – 19                                                                     JUL 103.10 – 1.85
JUL 1251 – 16                                                                       SEP 104.45 – 1.75
SEP 1269 – 12                                                                        DEC 106.25 – 1.70
NOV 1286 – 10                                                                      MAR 108.00 – 1.70