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

Coffee Market Report

01 Jul 2020

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 June were 88,615 bags or 60.04% lower than the same month last year, at a total of 263,200 bags. This contributes to the islands cumulative robusta coffee exports for the first nine months of the present October 2019 to September 2020 coffee year to be 474,758 bags or 27.49% higher than the same period in the previous coffee year, at a total of 2,202,068 bags.

There has been a relatively strong start to the new monsoon season over the main coffee districts in South West India this year, with 18% more rainfall than the historical average for June, which has brought to the fore speculation that it might have some impact upon the prospects for the developing new crop. One might though speculate that there have after all been rains, albeit arriving 2 weeks earlier than normally seen, and that so long as the monsoon season continues to bring good rains to the fore, that there might not actually be a problem for this new crop.

The September to September contract arbitrage between the London and New York markets widened yesterday; to register this at 47.16 usc/Lb. This equates to 46.70% 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 608 bags yesterday; to register these stocks at 1,652,630 bags, with 92.9% of these certified stocks being held in Europe at a total of 1,534,731 bags and the remaining 7.1% being held in the USA at a total of 117,899 bags. There was meanwhile a smaller in number 400 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 29,338 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 24,833 bags over the weeks of trade leading up to Monday 29th. June, to see these stocks registered at 1,957,667 bags, on the day.

It was a firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive sideways track for the day. The Sugar and Coffee markets ended the day on a positive note, while the Cocoa market ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.5075% higher; to see this index registered at 365.5839. The day starts with the U.S. Dollar steady, trading at 1.236 to Sterling, at 1.122 to the Euro and with the US Dollar buying 5.463 Brazilian Real.

The London and New York markets started the day yesterday trading on a modest positive note, buoyed by some degree of follow-through confidence from the very firm close on Monday. Both markets continued to trade on this positive note into the early afternoon trade. As the afternoon progressed the New York market trended deeper into positive territory with the London market following suit in a more sedate manner. Both the New York and the London markets fell back off the highs of the day late in the afternoon session to close on a positive note for the day.

The London market ended the day on a positive note and with 81.81% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 36% of the earlier gains of the day intact. This firmer close, albeit that the New York markets fell back off the highs of the day late in the afternoon session, might inspire some degree of confidence to possibly set the markets for a follow-through steady start to early trade today, against the prices yesterday, as follows:

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

SEP 1187 + 9                                                                           SEP 101.00 + 0.90
NOV 1205 + 9                                                                         DEC 103.45 + 0.95
JAN 1224 + 10                                                                        MAR 105.35 + 1.05
MAR 1240 + 11                                                                       MAY 106.40 + 1.05
MAY 1258 + 11                                                                       JUL 107.55 + 1.10
JUL 1275 + 10                                                                         SEP 108.65 + 1.10
SEP 1288 + 10                                                                          DEC 110.25 + 1.05
NOV 1304 + 11                                                                        MAR 111.85 + 1.05