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

Coffee Market Report

18 Aug 2020

The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market increase their net long position by 44.82% within this market over the week of trade leading up to Tuesday 11th. August; to register a new net long position of 23,777 lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.66%, to register a net long position of 55,111 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market increased their new net long position within the market by 1,70% to register a new net long position of 13,010 Lots which is the equivalent of 3,688,277 bags. This net long position has most likely been further increased, following the period of positive trade that has since followed.

The November to December contract arbitrage between the London and New York markets widened yesterday; to register this at 54.94 usc/Lb. This equates to 46.77% 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 21,552 bags yesterday to register these stocks at 1,368,340 bags, with 93.5% of these certified stocks being held in Europe at a total of 1,279,765 bags and the remaining 6.5% being held in the USA at a total of 88,575 bags. There is meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 27,215 bags.

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 New York Arabica Coffee markets ended the day on a positive note, while the Sugar, Cocoa and London Robusta Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.1462% higher; to see this index registered at 406.2818. The day starts with the U.S. Dollar steady, trading at 1.314 to Sterling, at 1.189 to the Euro and with the US Dollar buying 5.509 Brazilian Real.

The London and New York markets started the day yesterday trading close to par on a modest soft note, both markets continued on this softer into the early afternoon trade. As the afternoon progressed the New York market started the attract some degree of buying support to see the market gain momentum and traction in to the late afternoon session, the London market followed suit in a more sedate manner, only to hit a ceiling a drop back from the highs of the day to close on a modest soft note for the day.

The London market ended the day on a modest close to par negative note and with 30% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 86.95% of the earlier gains of the day intact. This mixed close, with the New York market gaining traction late in the day might inspire some degree of confidence to possibly see the markets set 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 1440 – 5                                                                          SEP 115.55 + 0.85
NOV 1378 – 6                                                                        DEC 117.45 + 1.00
JAN 1385 – 2                                                                         MAR 119.40 + 0.95
MAR 1398 – 1                                                                       MAY 120.25 + 1.00
MAY 1414 + 1                                                                        JUL 121.10 + 1.15
JUL 1430 + 1                                                                          SEP 121.85 + 1.30
SEP 1444 + 1                                                                          DEC 122.80 + 1.35
NOV 1458 + 1                                                                        MAR 123.80 + 1.45