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

Coffee Market Report

08 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 8.28% over the week of trade leading up to Tuesday 1st. June; to register a new net long position of 45,844 lots. Meanwhile the longer term in nature Index Fund sector of this market cut their net long position within the market by 3.23%, to register a net long position of 76,148 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 19.05% to register a new net long position 42,156 Lots, which is the equivalent of 11,951,039 bags. This net long position has most likely been marginally increased following the period of mixed but overall firmer trade that has since followed.

The July-to-July contract arbitrage between the London and New York markets narrowed yesterday; to register this at 86.44 usc/Lb. This equates to 53.97% 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 9,307 bags yesterday, to register these stocks at 2,106,020 bags, with 93.26% of these certified stocks being held in Europe at a total of 1,964,128 bags and the remaining 6.74% being held in the USA at a total 141,892 bags. Of this, a total 1,143,402 bags, or 54.29% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 37.07% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 12,790 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 108,025 bags.

It was a mixed day on the commodity markets yesterday as the U.S Dollar slid back somewhat while investors await new U.S Price Inflation data later this week for clarity on when the Federal Reserve might start tapering economic support measures. The London Robusta Coffee, Gold, Silver and Platinum markets ended the day on a positive note, while the Sugar, New York Arabica Coffee, Cocoa, Wheat, Corn, Soybean and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.416 Sterling, at 1.218 the Euro and with the US Dollar buying 5.047 Brazil Real.

The New York and London markets started the day yesterday trading on a modest firmer note, the markets would quickly drop back from the early morning highs to be set on a softer track, this saw the New York market trend softer while the London market continued to oscillate around par for the remainder of the morning session. As the afternoon progressed the New York market rallied slightly before coming under some degree of selling pressure, the markets both hit a low to bounce back and recover, with the markets trending firmer towards the close. This was short lived in New York as the market hit a ceiling limiting the gains for the day and to see the market drop back to settle softer at the close, while the London market continued to trend firmer to see the market settle firmer at the close.

The London market ended the day on a positive note and with 54.17% of the gains of the day intact, while the New York market ended the day on a negative note and with 54.54% of the losses of the day intact. This mixed close does little to inspire confidence, nor does it indicate direction and one might think that 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 USC/LB.

JUL 1625 + 13                                                        JUL 160.15 – 1.50
SEP 1651 + 13                                                        SEP 162.20 – 1.45
NOV 1671 + 14                                                      DEC 165.00 – 1.35
JAN 1686 + 15                                                       MAR 167.50 – 1.30
MAR 1698 + 14                                                     MAY 168.55 – 1.30
MAY 1712 + 14                                                      JUL 169.30 – 1.25
JUL 1728 + 14                                                        SEP 169.70 – 1.20
SEP 1743 + 14                                                        DEC 170.10 – 1.15