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

Coffee Market Report

28 Oct 2020

Vietnam is still encountering widespread rains at this time of the year, which is related to relatively normal seasonality, while this year is considered to be dramatically wetter in some parts, than usual, with the La Nina weather phenomenon that traditionally brings with it, a more active rain season. In this respect, the latest and according to weather forecasters, Typhoon Molave is anticipated to make landfall along the coastal regions of Vietnam today. The country has implemented evacuation processes ahead of landfall and the intensity of this weather system is anticipated to decrease in the coming days. There is a chance that the anticipated heavy rains as the system moves across the coffee growing areas could negatively impact infrastructure, though there is little to indicate that the current coffee crop that is nearing harvest will be greatly impacted. The strength of this latest storm as it moves ashore, will be closely monitored.

The December 2020 to January 2021 contract arbitrage between the New York and London markets narrowed yesterday: to register this at 45.67 usc/Lb. This equates to 42.70% price discount for the London Robusta coffee market.

The Certified Robusta coffee stocks held against the London exchange have been reported to increase by 125,000 bags over the weeks of trade leading up to Monday 26th. October, to see these stocks registered at 2.015,500 bags, on the day.

The Certified washed Arabica coffee stocks held against the New York exchange was seen to increase by 12,774 bags yesterday, to register these stocks at 1,141,334 bags, with 94% of these certified stocks being held in Europe at a total of 1,072,574 bags and the remaining 7% being held in the USA at a total 68,760 bags. There was meanwhile a larger in number 16,601 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 50,172 bags.

It was a modest firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Sugar and Coffee markets ended the day on a positive note, while the Cocoa market settled on a softer note for the day. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.3934% higher; to see this index registered 420.5373.   The day starts with the U.S. Dollar steady, trading at 1.304 Sterling, at 1.178 the Euro and with the US Dollar buying 5.706 Brazilian Real. 

The New York market started the day yesterday trading on a modest positive note, while the London market started the day yesterday trading on a modest softer note, the London market soon attracted a degree of buying support to see the markets trend positive for the morning session. As the afternoon progressed the New York market continued to oscillate trend positive before attracting selling pressure late in the day to see the market settle near to par for the day while the London market continued on a firmer path to settle near to the highs of the day.

The London market ended the day with on a positive note with 92.68% of the earlier gains of the day intact, while the New York market ended the day on a positive note with 19.35% of the earlier gains of the day intact. This firmer close might inspire some degree of confidence, albeit that the New York market dropped back off the highs of the day to settle on a modest positive note, this may possibly set the markets 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.   

JAN 1351 + 36                                                           DEC   106.95 + 0.30
MAR   1357 + 36                                                               MAR   109.55 + 0.20
MAY   1367 + 32                                                               MAY  111.25 + 0.20
JUL   1384 + 31                                                                 JUL    112.80 + 0.20
SEP     1401 + 31                                                                SEP    114.05 + 0.20
NOV    1418 + 31                                                               DEC   115.60 + 0.10
JAN    1434 + 31                                                                MAR   117.10 + 0.05
MAR    1451 + 31                                                                 MAY   118.10 Unch