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

Coffee Market Report

07 Jul 2021

The International Coffee Organisation ICO have reported that the global coffee exports for the month of May were 10.10% lower than the same month in the previous year, at a total of 9.79 million bags. This they say, has contributed to the cumulative global coffee exports for the first eight months of the October 2020 to September 2021 coffee year to be 2.20% higher than the same period in the previous year, at a total of 87.30 million bags. The cumulative increase in exports over the eight-month period, fuelled by Brazil which contributed 35% of the total exports to consumer markets.

The International Coffee Organisation ICO have come forth to marginally revise downwards their earlier forecast for global coffee supply and demand for the current October 2020 to September 2021 coffee year, owing to the biennially bearing smaller Brazil Arabica coffee crop currently in harvest, and dry weather conditions, to report that against an estimated global coffee supply of 169.50 million bags, down 0.18% from their previous estimate of 169.80 million bags, global coffee consumption is estimated at approximately 167.24 million bags, down 0.20% from their previous estimate of 167.58 million bags This indicating that the global coffee markets will be in a surplus supply of 2.26 million bags for the October 2020 to September 2021 coffee year.

Within the ICO report, cumulative global exports for the first eight months of the seasonal coffee year October 2020 to September 2021 are seen to have decreased by 3.20% year on year from Africa, to a total 8.68 million bags.

There was likewise, a decline in exports year on year from Asia with exports seen to have decreased by 6% during the first eight months of the seasonal coffee year October 2020 to September 2021, to total 26.06 million bags.

The ICO report similarly includes within the total global exports, the cumulative export figures, from Mexico and the traditional washed arabica Central American bloc; Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador, to report that the first eight months of the cumulative coffee year posted a decrease of 6.50% to a total 10.43 million bags.

The September-to-September contract arbitrage between the London and New York markets narrowed yesterday to register this at 71.94 usc/Lb. This equates to 48.58% 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 800 bags yesterday, to register these stocks at 2,170,524 bags, with 93.59% of these certified stocks being held in Europe at a total of 2,031,364 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 53.03% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.87% 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.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 28,667 bags over the week of trade leading up to Monday 6th July, to see these stocks registered at 2,485,500 bags, on the day.

It was a softer day on the commodity markets yesterday, the leading in influence Oil markets registered downward momentum during the session, spurring a widespread sell off in the commodity sector. The Gold market ended the day on a positive note, while the Sugar, Coffee, Cocoa, Corn, Wheat, Soybean, Oil, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.381 Sterling, at 1.182 the Euro and with the US Dollar buying 5.197 Brazil Real.

The New York and London markets started the day yesterday near to par on a modest softer note. The markets continued to trade in negative territory for the remainder of the morning session. With the Brazil Real weaker to the US Dollar, the markets were seen to take a more bearish outlook into the afternoon session. The New York market started to lose more value and with sell stops triggered along the way, accentuating the losses for the day. The London market followed suit with the influence of further weight being lost within the New York market, to likewise lose more value and gain downward momentum throughout the session. Both markets hit floors late in the day, as buyers returned to the floor, to limit the losses for the day to some degree.

The London market ended the day on a negative note and with 72.73% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 90% of the losses of the day intact. This softer close is a somewhat dampening 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 hesitant start to early trade today, against the prices set yesterday, as follows:

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

SEP 1679 – 8                                                            SEP 148.10 – 4.95
NOV 1678 – 5                                                          DEC 151.10 – 4.85
JAN 1671 – 9                                                           MAR 153.70 – 4.95
MAR 1660 – 17                                                       MAY 155.00 – 4.90
MAY 1657 – 24                                                       JUL 156.05 – 4.85
JUL 1663 – 29                                                         SEP 156.85 – 4.80
SEP 1673 – 31                                                         DEC 157.85 – 4.80
NOV 1683 – 31                                                       MAR 158.85 – 4.75