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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

01 Jun 2021

The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market raised their net long position within this market by 2.63% over the week of trade leading up to Tuesday 25th. May; to register a new net long position of 42,335 lots. Meanwhile the longer term in nature Index Fund sector of this market cut their net long position within the market by 0.60%, to register a net long position of 78,506 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market raised their net long position within the market by 0.18% to register a new net long position 35,411 Lots, which is the equivalent of 10,038,062 bags. This net long position has most likely been increased following the period of mixed but overall firmer trade that has since followed.

With key markets closed yesterday, limited activity, with both United States and British markets not trading, there was little overnight news to inspire direction. These markets will open for the first day of the new week's trade today, following what was for the coffee markets, a strong close on Friday.

The July-to-July contract arbitrage between the London and New York markets widened on Friday; to register this at 90.55 usc/Lb. This equates to 55.77% 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 increase by 9,080 bags on Friday, to register these stocks at 2,075,788 bags, with 93.15% of these certified stocks being held in Europe at a total of 1,933,646 bags and the remaining 6.85% being held in the USA at a total 142,142 bags. Of this, a total 1,139,242 bags, or 54.88% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 36.33% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 15,482 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 128,252 bags.

The commodity markets remained closed yesterday as the USA celebrated their Memorial Day holiday. The Sugar, Coffee, Cocoa, Gold and Palladium markets ended the day on Friday, on a positive note, the Silver market remained unchanged on the day, while the Wheat, Soybean, Corn and Platinum markets ended the day on Friday, on a softer note. The day starts with the U.S. Dollar trading at 1.422 Sterling, at 1.223 to the Euro and with the US Dollar buying 5.217 Brazil Real.

The New York and London markets started the day on Friday trading on a modest firm note. The markets continued to trade in positive territory for the remainder of the morning session. As the afternoon progressed the New York market started to add more value and with buy stops triggered along the way, accentuating the gains for the day. The London market followed suit with the influence of further weight being added within the New York market, to likewise add more value and gain momentum throughout the session. Both markets hit ceilings late in the day, as sellers returned to the floor, to limit the gains for the day to some degree but still see the markets settle very positive at the close.

The London market ended the day on Friday on a very positive note and with 77.64% of the gains of the day intact, while the New York market ended the day on Friday on likewise very positive note and with 89.74% of the gains of the day intact. This firm close is a somewhat supportive factor for confidence in the market, there is likely to be some degree of caution and hesitancy for early trade today and thus one might expect to see only a modest follow through support to early trade today, against the prices set on Friday, as follows:

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

JUL 1583 + 66                                                       JUL 162.35 + 7.00
SEP 1605 + 67                                                      SEP 164.30 + 7.00
NOV 1620 + 65                                                     DEC 167.00 + 6.90
JAN 1632 + 65                                                     MAR 169.35 + 6.90
MAR 1644 + 64                                                   MAY 170.25 + 6.75
MAY 1659 + 65                                                   JUL 170.80 + 6.60
JUL 1674 + 65                                                     SEP 170.95 + 6.45
SEP 1689 + 67                                                     DEC 171.00 + 6.35