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

Coffee Market Report

17 May 2021

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector raise their net long position by 2.34% within the market over the week of trade leading up to Tuesday 11th. May: to register a net long position of 34,663 lots, which is the equivalent of 9,826,807 bags. This net long position has most likely been decreased following the period of overall softer trade that has since followed.

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this market increase their net long position by 27.16% within the market over the week of trade leading up to Tuesday 11th May; to register a new net long position of 31,251 Lots which is the equivalent of 5,208,500 bags. This net long position has most likely been decreased following the period of overall softer trade that has since followed.

Weather conditions in Brazil are reported to be mostly normal with temperatures remaining mild within most of the coffee growing districts regions over the next seven days.

The July-to-July contract arbitrage between the London and New York markets widened on Friday; to register this at 78.78 usc/Lb. This equates to 54.33% price discount for the London Robusta coffee market. This wide arbitrage will likely be viewed by price sensitive roasters as an attractive alternative discount for robusta against the comparatively higher value arabica coffee.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,500 bags on Friday, to register these stocks at 2,018,710 bags, with 95.48% of these certified stocks being held in Europe at a total of 1,927,376 bags and the remaining 4.52% being held in the USA at a total 91,334 bags. Of this, a total 1,074,656 bags, or 53.23% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 37.60% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register these pending grading stocks at 67,306 bags.

It was a marginally firmer day on the commodity markets on Friday, the US Dollar lost ground against a basket of other currencies, following weaker indicators from this largest consumer economy with lower-than-expected data showing that U.S retail sales stalled during April. The Soybean, Wheat, Gold, Platinum, Silver and Palladium markets ended the day on a positive note, while the Sugar, Cocoa, Coffee and Corn markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.408 Sterling, at 1.213 the Euro and with the US Dollar buying 5.273 Brazil Real.

The New York and London markets started the day on Friday trading on a modest softer note, the markets would continue to trade around par for the remainder of the early morning session. As the afternoon progressed the New York market rallied to make some degree of gains for the early afternoon session, while the London market continued to trade around par. The markets would come under a degree of selling pressure late in the afternoon session which saw the New York market drop back from the highs of the day and set on a softer path. The markets settled near to the lows of the day with most of the losses intact.

The London market ended the day on a negative note and with 89.74% of the losses the day intact, while the New York market ended the day on likewise negative note and with 82.35% of the losses of the day intact. This very soft close does little to inspire confidence and with the markets settling near to the lows of the day, one might think that the markets are set for a hesitant start to early trade today, against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                             NEW YORK USC/LB.

JUL 1460 – 35                                                         JUL 145.00 – 1.40
SEP 1486 – 34                                                         SEP 146.95 – 1.40
NOV 1503 – 34                                                       DEC 149.60 – 1.20
JAN 1517 – 34                                                        MAR 151.90 – 1.05
MAR 1530 – 34                                                      MAY 152.85 – 1.00
MAY 1543 – 34                                                      JUL 153.45 – 0.95
JUL 1557 – 34                                                        SEP 153.75 – 0.90
SEP 1569 – 34                                                        DEC 154.00 – 0.85