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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

30 Nov 2020

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this cut their net long position within the market by 1.12% over the week of trade leading up to Tuesday 24th. November: to register a new net long position of 7,872 Lots which is the equivalent of 1,312,000 bags.  This new net long position has most likely been marginally reduced, following the period of mixed but overall sideways trade that has since followed.

With the month of November coming to a close and with the shipment statistics already at hand, the Vietnam General Statistics office have estimated that the coffee exports for the month of November shall be 37.50% lower than the same month last year, at a total of approximately 1,166,667 bags.  This they say, shall result in the countries coffee exports for the first eleven months of this calendar year to be 3.9% lower than the same period last year, at a total of 23,500,000 bags.

One might think that the relatively large decrease in coffee exports during the month of November out of Vietnam when compared to the same month in the previous year, could be attributed to the effects of Typhoon Molave, which caused an estimated 0 million of damage to infrastructure across the Vietnam Highlands during the early weeks of November, the typhoon has been said to be one of the most powerful weather systems to impact Vietnam over the past 20 years.

The January 2021 to March 2021 contract arbitrage between the London and New York markets widened on Friday: to register this at 60.20 usc/Lb. This equates to 48.47% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease 1,408 by on Friday, to register these stocks at 1,244,937 bags, with 93.5% of these certified stocks being held in Europe at a total of 1,164,612 bags and the remaining 6.5% being held in the USA at a total 80,325 bags. There was meanwhile a larger in number 36,960 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 94,225 bags.

It was a firmer day overall on the commodity markets on Friday, 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 ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.2677% higher; to see this index registered 438.2045.  The day starts with the U.S. Dollar, trading at 1.334 Sterling, at 1.197 the Euro and with the US Dollar buying 5.344 Real. 

The New York market started the day on Friday trading on a very positive note, while the London market started the day on a Friday trading on a likewise positive note, the London market soon dropped back from the highs of the morning trade whilst the New York market continued to trend in a positive direction. As the afternoon progressed the London market bounced back from the lows of the morning to see the market settle on a modest positive note for the day, while the New York market maintained the gains from the morning to see the market settle on a very positive note for the day.

The London market ended the day on a modest positive note with 18.18% of the earlier gains of the day intact. while the New York market ended the day on a likewise positive note with 92.16% of the earlier gains of the day intact. This firmer close might inspire some degree of confidence to possibly set the markets for a follow-through steady start to early trade today, against the prices set on Friday, as follows:

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

JAN 1411 + 2                                                      MAR 124.20 + 7.05
MAR   1413 + 2                                                           MAY   125.85 + 6.85
MAY   1424 + 3                                                          JUL 127.35 + 6.65
JUL   1439 + 5                                                            SEP    128.50 + 6.40
SEP    1455 + 5                                                            DEC     129.70 + 6.15
NOV   1471 + 4                                                           MAR    130.95 + 6.00
JAN   1486 + 3                                                            MAY   131.65 + 5.90
MAR   1501 + 2                                                            JUL   132.30 + 5.80