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

Coffee Market Report

15 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 cut their net long position within this market by 3.23% over the week of trade leading up to Tuesday 8th. June; to register a new net long position of 44,365 lots. Meanwhile the longer term in nature Index Fund sector of this market cut their net long position within the market by 0.24%, to register a net long position of 75,962 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market cut their net long position within the market by 4.41% to register a new net long position 40,297 Lots, which is the equivalent of 11,424,021 bags. This net long position has most likely been marginally decreased following the period of mixed but overall softer trade that has since followed.

The Social unrest and protests against a proposed tax reform in Colombia, which started at the beginning of May are seeing signs of improvement as key stakeholders continue talks with Government Authorities. The flow of coffee has from the interior, has been reported to have improved substantially over the past week, with Government reporting less than 20 road blockades when compared to over 2,000 during the first weeks in May.

The July-to-July contract arbitrage between the London and New York markets narrowed yesterday; to register this at 82.93 usc/Lb. This equates to 53.82% 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 7,197 bags yesterday, to register these stocks at 2,131,727 bags, with 93.41% of these certified stocks being held in Europe at a total of 1,991,266 bags and the remaining 6.59% being held in the USA at a total 140,461 bags. Of this, a total 1,143,402 bags, or 53.64% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 38.25% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 12,832 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 79,825 bags.

It was a softer day on the commodity markets yesterday, as investors await further news on possible cutting back of the monetary policy by the Federal Reserve in the US. The Platinum market ended the day on a positive note, while the Sugar, Coffee, Corn, Wheat, Soybean, Gold, Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.411 Sterling, at 1.210 the Euro and with the US Dollar buying 5.114 Brazil Real.

The New York and London markets started the day yesterday trading on a modest positive note, the markets quickly fell back from the highs of the early morning session to see the New York and London markets set on a softer track for the remainder of the day. The markets hesitantly traded south of par before coming under severe selling pressure late in the morning session, pressured by long liquidation selling to accentuate the losses for the day’s trade. As the afternoon progressed the markets rebounded from the lows of the day to recover somewhat, to see both the New York and London markets settle on a softer note at the close.

The London market ended the day on a negative note and with 62.16% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 56.78% of the losses of the day intact. This softer close, albeit that the market recovered from the earlier in the day losses, does little to inspire any follow through confidence and one might think that the markets are due for a hesitant start to early trade today, against the prices set yesterday, as follows:

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

JUL 1569 – 23                                                         JUL 154.10 – 3.35
SEP 1596 – 23                                                         SEP 156.20 – 3.40
NOV 1616 – 22                                                       DEC 159.15 – 3.40
JAN 1631 – 21                                                        MAR 161.75 – 3.40
MAR 1643 – 21                                                      MAY 163.05 – 3.35
MAY 1655 – 22                                                      JUL 164.00 – 3.25
JUL 1670 – 23                                                        SEP 164.65 – 3.15
SEP 1683 – 24                                                        DEC 165.40 – 3.05