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

Coffee Market Report

10 Aug 2020

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector switched their net short position within the market to a new net long position over the week of trade leading up to Tuesday 4th. August: to register a new net long position of 12,793 Lots which is the equivalent of 3,626,759 bags. This new net long position has most likely been further increased, following the period of positive trade that has since followed.

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this market cut their net short sold position within the market by 77.14% over the week of trade leading up to Tuesday 4th. August; to register a short-sold position of 2,034 Lots.  This net short sold position is the equivalent of 339,000 bags and has most likely been further decreased following the period of positive trade that has since followed.

El Salvador reported that during the October 2019 to June 2020 period, coffee exports decreased by 29.93% or 135,602 bags when compared to the same period last year to total 317,466 bags.

The November to December contract arbitrage between the London and New York markets narrowed on Friday; to register this at 56.08 usc/Lb. This equates to 47.57% 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 34,441 bags on Friday to register these stocks at 1,467,801 bags, with 93.9% of these certified stocks being held in Europe at a total of 1,377,696 bags and the remaining 6.1% being held in the USA at a total of 90,105 bags. There is meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags.

It was a softer day overall on the commodity markets on Friday, to see the overall macro commodity index taking something of a downwards track for the day. The Cocoa and London Robusta Coffee markets ended the day on a positive note, while the Sugar and New York Arabica Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.3178% lower; to see this index registered at 397.2149. The day starts with the U.S. Dollar steady, trading at 1.307 to Sterling, at 1.180 to the Euro and with the US Dollar buying 5.438 Brazilian Real.

The London and New York markets started the day on Friday trading on a close to par positive note, both markets maintained this stance into the early afternoon trade. As the afternoon progressed both the London and the New York markets started to attract a degree of selling pressure to see both markets set on a softer track for the afternoon session. The New York market remained soft for much of the late afternoon session to see the market close near on a softer note for the day, while the London market gained some degree of upward pressure to see the market close firmer for the day.

The London market ended the day on a positive note and with 47.62% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 35.59% of the earlier losses of the day intact. This mixed close does little to indicate direction and one might think the markets are due for a hesitant steady start for early trade today, against the prices set on Friday, as follows:

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

SEP 1393 + 25                                                                      SEP 115.45 – 1.55
NOV 1363 + 10                                                                    DEC 117.90 – 1.05
JAN 1373 + 10                                                                      MAR 120.10 – 1.00
MAR 1387 + 7                                                                      MAY 121.15 – 1.00
MAY 1402 + 4                                                                      JUL 121.95 – 0.95
JUL 1421 + 3                                                                        SEP 122.55 – 0.95
SEP 1437 + 4                                                                        DEC 123.45 – 0.85
NOV 1455 + 4                                                                      MAR 124.50 – 0.65