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

Coffee Market Report

30 Oct 2020

The Ivory Coast as west Africa’s leading robusta coffee producer, have reported that their coffee exports for the month of September were 95,817 bags or 58.51% lower than the same month last year, at a total of 67,950 bags. This has contributed to their country’s cumulative coffee exports for the October 2019 to September 2020 coffee year to be 269,166 bags or 15.73% lower than the same period last year, at a total of 1,441,533 bags.

There have been further news reports overnight meanwhile that typhoon Molave has made its way into some low-lying areas found in the Vietnam highlands resulting in localised flooding. Reports suggest that Molave is expected to trigger intermittent rainfall over the next 10 days across the Vietnam coffee belt in the Central Highlands. The full extent of the storms impact is yet to be seen or quantified but this will be monitored in the coming days as the storm moves further ashore and inland.

The weather reports from Brazil continue to come to fore with good rainfall reports for all of the major coffee districts in the country, this following localised rainfall through the month thus far, to assist to set the flowerings for the next 2021 coffee crop. Weather reports suggest that rainfall across most major coffee districts shall marginally taper off towards the first week of November, this albeit still early days in terms of the October to March rain season, is leading many to speculate that the country and despite biennial bearing factors, is due for a good coffee crop for next year. Meanwhile Monday will be the Dia de Finados (All Souls Day) Public holiday in Brazil and coming to the fore as a long weekend, which will most likely see some internal market players off the field of play for today.

The December 2020 to January 2021 contract arbitrage between the New York and London markets widened yesterday: to register this at 43.95 usc/Lb. This equates to 42.02% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange was seen to increase by 2,230 bags yesterday, to register these stocks at 1,149,043 bags, with 94% of these certified stocks being held in Europe at a total of 1,080,283 bags and the remaining 7% being held in the USA at a total 68,760 bags. There was meanwhile a larger in number 7,136 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 62,674 bags.

It was a softer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a negative track for the day. The Sugar, Cocoa and Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.0670% lower; to see this index registered 407.7506.   The day starts with the U.S. Dollar steady, trading at 1.291 Sterling, at 1.168 the Euro and with the US Dollar buying 5.779 Brazilian Real. 

The New York and London markets started the day yesterday trading on a modest soft note but quickly attracted a large degree of selling pressure to see the markets trend south of par for the early morning session. As the afternoon progressed the New York market fell back further accentuating the losses for the day, the London market followed suit in a more sedate manner. The New York market bounced off the lows of the day limiting the losses of the late afternoon trade to see the market recover to settle on a modest softer note, while the London market oscillated around par to see the market settle on a modest close to par softer note for the day.

The London market ended the day with on a modest negative note with 45.46% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 19.51% of the earlier losses of the day intact. This softer close, albeit that the New York market recovered most of the earlier losses of the day, does little to inspire confidence and one might think the markets are due for little better than 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 1337 –10                                                           DEC   104.60 – 0.40
MAR   1345 – 10                                                             MAR   107.20 – 0.50
MAY   1356 – 9                                                                MAY  108.90 – 0.50
JUL   1373 – 9                                                                 JUL    110.55 – 0.45
SEP     1390 – 9                                                                SEP    111.95 – 0.40
NOV    1407 – 9                                                               DEC   113.60 – 0.30
JAN    1423 – 9                                                                MAR   115.10 – 0.25
MAR    1440 – 9                                                               MAY   116.25 – 0.10