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

Coffee Market Report

24 Jul 2020

The internal market within Vietnam has seen increased commercial activity over the past few weeks, with the improved value in the London robusta market, providing a degree of support, and this largest robusta producer measures sales of their current coffee crop, to maintain a steady flow to consumer markets. The National Hydrology and Meteorology Forecast Centre in Vietnam has meanwhile, reported that weather conditions in Vietnam are favourable and conducive for new crop cherry development, ahead of the new crop that is due to start harvest around October this year.

The lack of weather reports for any sign of potential cold fronts to come to the fore in Brazil, with the Brazil new crop harvest underway, and the prospects for warmer weather to come, may dampen weather market speculative sentiment within the coffee markets, which experienced a relatively flat, consolidation day yesterday. Historically the frost threat season for Brazil was foreseen to remain in place until the middle of August, with the climatic contribution of a full moon due for the first week in August this year, though one would think that market focus shall already be thinking post frost season and looking towards the pending start of the late September spring and summer rain season for Brazil.

The September to September contract arbitrage between the London and New York markets narrowed yesterday; to register this at 46.26 usc/Lb. This equates to 43.03% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday to register these stocks at 1,597,932 bags, with 94.1% of these certified stocks being held in Europe at a total of 1,504,440 bags and the remaining 5.9% being held in the USA at a total of 93,492 bags. There was meanwhile a larger in number 4,675 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 7,451 bags.

It was a softer day overall on the commodity markets yesterday, 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 0.0333% lower; to see this index registered at 384.0331. The day starts with the U.S. Dollar steady, trading at 1.273 to Sterling, at 1.159 to the Euro and with the US Dollar buying 5.211 Brazilian Real.

The New York and London markets started the day yesterday trading on a softer note, both markets maintained this softer stance, the markets came under a degree of selling pressure to see the New York market drop back into very negative territory for the morning trade with the London market following suit in a more sedate manner. As the afternoon progressed the New York market recovered and bounced back off the lows of the day to see the market settle on a softer note for the day, with the London market settling on a close to par negative note for the day.

The London market ended the day on a negative note and with 95.24% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 94.29% of the earlier losses of the day intact. This softer close, albeit that the New York market bounced back off the lows of the day, does little to indicate direction and might think the markets are due for 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 1350 – 7                                                                          SEP 107.50 – 0.85
NOV 1363 – 7                                                                        DEC 110.30 – 0.70
JAN 1378 – 4                                                                         MAR 112.35 – 0.65
MAR 1392 – 1                                                                       MAY 113.40 – 0.65
MAY 1407 + 1                                                                       JUL 114.35 – 0.60
JUL 1423 + 3                                                                         SEP 115.25 – 0.60
SEP 1437 + 6                                                                         DEC 116.90 – 0.60
NOV 1454 + 7                                                                       MAR 118.60 – 0.60