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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

14 Aug 2020

The analysts Safras & Mercado have estimated that almost 90% of the new Brazil coffee crop has already been harvested, with the Conilon harvest almost completed. This based on the Safras & Mercado forecast for a new crop of 68 million bags, the report would indicate that so far approximately 61 million bags of the new crop have been harvested. The Brazil harvest this year is at a slower pace, compared to the same week in 2019 when approximately 100% of the crop was harvested, although the size of this biennial bearing larger crop can be attributed to the slower harvest time this year. Dry weather conditions prevail over most coffee growing regions with scattered light rains forecast for the western areas between Sao Paulo and Mato Grosso. Over the past week sporadic rains fell in Espirito Santo and South of Bahia, Conilon’s main production region.

The November to December contract arbitrage between the London and New York markets widened yesterday; to register this at 55.42 usc/Lb. This equates to 46.92% 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 20,754 bags yesterday to register these stocks at 1,391,755 bags, with 93.5% of these certified stocks being held in Europe at a total of 1,301,650 bags and the remaining 6.5% 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 firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive track for the day. The Sugar, Cocoa and Coffee markets ended the day on a positive note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.4579% higher; to see this index registered at 403.1524. The day starts with the U.S. Dollar steady, trading at 1.307 to Sterling, at 1.182 to the Euro and with the US Dollar buying 5.368 Brazilian Real.

The London and New York markets started the day yesterday trading close to par on a modest positive note, both markets continued on this gradual upward track into the early afternoon trade. As the afternoon progressed both the London and New York markets started to attract a large degree of buying support to gain momentum and rally to see both markets settle near to the highs of the day.

The London market ended the day on a positive note and with 95.24% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 81.91% of the earlier gains of the day intact. This very firm close might inspire some degree of confidence to possibly set the markets for a steady start for early trade today, against the prices set yesterday, as follows:

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

SEP 1442 + 48                                                                      SEP 116.20 + 4.15
NOV 1382 + 40                                                                    DEC 118.10 + 3.85
JAN 1387 + 37                                                                     MAR 120.35 + 3.85
MAR 1399 + 35                                                                    MAY 121.15 + 3.65
MAY 1414 + 34                                                                    JUL 121.90 + 3.55
JUL 1431 + 32                                                                      SEP 122.60 + 3.60
SEP 1445 + 30                                                                      DEC 123.65 + 3.85
NOV 1460 + 28                                                                    MAR 124.70 + 4.00