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

Coffee Market Report

17 Sep 2020

The Green Coffee Association of the U.S.A. have announced that the country’s port warehouse stocks decreased by 309,013 bags or 4.38% during the month of August, to register these stocks at 6,745,336 bags at the end of the month. The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 595,000 bags per week, would conservatively have been at least 1.2 million bags. These cumulative coffee stocks would indicate that there is a steady level of comfort of just over eleven weeks of overall supply available to fuel these two countries’ combined coffee consumption.

This marks the largest monthly draw down of the U.S Green Coffee Stocks since February this year, and the biggest draw down during the Covid-19 pandemic, when stocks increased each month due to the closure of hotel, restaurant, catering and coffee shop sector. The current levels of coffee stocks, which include the certified coffee stocks that are held in certified warehouses and registered to the New York exchange, are still seen to be relatively high when compared to historic lows seen in 2011 of 4 million bags.

The November to December contract arbitrage between the London and New York markets narrowed yesterday; to register this at 56.71 usc/Lb. This equates to 47.32% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 45 bags yesterday to register these stocks at 1,116,966 bags, with 93.60% of these certified stocks being held in Europe at a total of 1,045,562 bags and the remaining 6.40% being held in the USA at a total of 71,404 bags. There is meanwhile a larger in number 2,270 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 2,239 bags.

It was a generally firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive soft sideways track for the day. The Sugar and London Robusta Coffee Markets ended the day on a positive note, while the Cocoa and New York Arabica Coffee market ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.2326% higher; to see this index registered at 415.2983. The day starts with the U.S. Dollar steady, trading at 1.293 to Sterling, at 1.177 to the Euro and with the US Dollar buying 5.238 Brazilian Real.

The London and New York markets started the day yesterday trading on a positive note, both markets continued to build momentum in the early morning session. As the afternoon progressed the markets came under a degree of selling pressure to see the New York market trend softer for the afternoon, the London market followed suit in a more sedate manner. The New York market took a more positive track in the late afternoon as volumes on the floor increased though the speculatively driven influence took a softer turn toward the end of the session, to see this market settle on a softer note while the London market settled on a mildly positive note for the day.

The London market ended the day with on a modest positive note with 23.53% of the earlier gains of the day intact, while the New York market ended the day on a softer note with 15.53% of the earlier losses of the day intact. This close does little to indicate direction and one 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.

NOV 1392 + 1                                                                 DEC 119.85 – 1.95
JAN 1408 + 3                                                                  MAR 121.55 – 1.75
MAR 1423 + 2                                                                 MAY 122.90 – 1.65
MAY 1434 + 2                                                                 JUL 124.20 – 1.60
JUL 1450 + 3                                                                   SEP 125.20 – 1.55
SEP 1463 + 2                                                                   DEC 126.30 – 1.40
NOV 1476 + 1                                                                 MAR 127.35 – 1.30
JAN 1488 + 1                                                                  MAY 128.00 – 1.25