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

Coffee Market Report

05 Jul 2021

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector cut their net long position by 19.10% within the market over the week of trade leading up to Tuesday 29th. June: to register a net long position of 31,515 lots, which is the equivalent of 8,934,363 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 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 5.68% within the market over the week of trade leading up to Tuesday 29th. June: to register a new net long position of 31,238 Lots which is the equivalent of 5,206,333 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 National Coffee Institute of Honduras (IHCAFE) have reported preliminary data shows that the country’s coffee exports for the month of June were 28.40% higher than the same month last year, at a total of 827,995 bags. This increase likely to be reflected by the past year's lockdown affected export figures reported at the same time last year. This months’ export figures reported, would see the cumulative coffee export figures for Honduras for the first nine months of the current October 2020 to September 2021 coffee year to be 5.10% lower than the same period in the previous year, at a total of 4,604,473 bags.

The Brazil government have reported meanwhile that the country’s green coffee exports for the month of June were 544,700 bags or 23.09% higher than the same month last year, at a total of 2,903,983 bags. The official breakdown of coffee exports by description for June will soon be released and can be anticipated to illustrate this figure more accurately.

There has been continued talk about the threat of frost over the past week in central and south eastern areas of Brazil, which is reported to have included regional pockets of the Brazil coffee belt. These reports, to provide a speculative boost to the New York and London robusta futures markets over the first half of the past week. The weather forecasts mostly predict dry cool, mostly normal conditions for the coming days, with harvesting continuing in the arabica areas, into peak.

The active and influential U.S.A. based markets are closed for the day today, in observation of the country's Independence Day holiday on 4th July. One might anticipate that with the U.S.A. markets not trading today, could bring with it a relatively subdued day of trade for the London coffee market that is trading solo for the day.

The September-to-September contract arbitrage between the London and New York markets narrowed on Friday; to register this at 75.62 usc/Lb. This equates to 49.41% 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 remain unchanged on Friday, to register these stocks at 2,171,324 bags, with 93.59% of these certified stocks being held in Europe at a total of 2,032,164 bags and the remaining 6.41% being held in the USA at a total 139,160 bags. Of this, a total 1,151,066 bags, or 53.01% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.89% 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 35,449 bags.

It was a firmer day on the commodity markets on Friday, as the US Dollar lost ground against a basket of other currencies, the latest round of US jobs data released to the markets provided limited support and registered a slight decline during the month of June. The Sugar, London Robusta Coffee, Soybean, Gold, Silver, Palladium and Platinum markets ended the day on a positive note, while the New York Arabica Coffee, Cocoa, Corn and Wheat markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.382 Sterling, at 1.186 the Euro and with the US Dollar buying 5.058 Brazil Real.

The New York and London markets started the day yesterday on a modestly positive note, the New York market continued on a firmer path for the remainder of the morning session, while the London market dropped back from the morning highs to be set on a softer path for the morning session. As the afternoon progressed the New York market came under a severe degree of selling pressure in a combination of speculative book squaring activity, sentiment altered course with warmer weather predicted to come, for Brazil. The softer momentum and stronger selling activity set this market on a softer path to the close. The London market continued to trade in positive direction, to be met with similarly increased selling activity, which saw the market drop back and settle on a modest near to unchanged firmer note for the day.

The London market ended the day on a positive note and with 16.67% of the gains of the day intact, while the New York market ended the day on a negative note and with 93.05% of the losses of the day intact. This mixed close does little to indicate direction, but one might think the London market that is trading solo today, is due for little better than a hesitant steady start to early trade today, against the prices set on Friday as follows:

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

SEP 1707 + 6                                                          SEP 153.05 – 3.35
NOV 1699 – 6                                                        DEC 155.95 – 3.35
JAN 1691 – 18                                                       MAR 158.65 – 3.30
MAR 1686 – 25                                                     MAY 159.90 – 3.25
MAY 1689 – 27                                                     JUL 160.90 – 3.25
JUL 1698 – 29                                                       SEP 161.65 – 3.25
SEP 1710 – 30                                                       DEC 162.65 – 3.25
NOV 1721 – 30                                                     MAR 163.60 – 3.25