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

Coffee Market Report

14 Jul 2021

The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of June were 197,825 bags or 47.04% higher than the same month last year, at a total of 618,388 bags, this number proving to be the highest month of coffee exports since 1991. Uganda Robusta exports registered a 63.89% increase when compared to the same month last year, to total 565,449 bags, whereas Arabica exports registered a decrease by 29.93% to a total 52,939 bags exported in June this year. The UCDA likewise report that the cumulative exports for the first nine months of the October 2020 to September 2021 coffee year are 718,348 bags or 18.95% higher than the same period in the previous year, at a total of 4,509,437 bags.

The Uganda Coffee Development Authority UCDA, have cited the comparative large increase in exports during the month of June to be due to new harvests from maturing coffee plantations that were recently planted, and rehabilitated within the context of the ongoing fifteen-year, government supportive initiative Coffee Roadmap program.

The September-to-September contract arbitrage between the London and New York markets narrowed yesterday to register this at 74.34 usc/Lb. This equates to 48.85% 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 3,105 bags yesterday, to register these stocks at 2,178,088 bags, with 93.63% of these certified stocks being held in Europe at a total of 2,039,253 bags and the remaining 6.37% being held in the USA at a total 138,835 bags. Of this, a total 1,150,741 bags, or 52.83% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.70% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 6,240 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 27,898 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 30,167 bags over the week of trade leading up to Monday 12th July, to see these stocks registered at 2,455,333 bags, on the day.

It was a softer day on the commodity markets yesterday, as new U.S consumer price data showed that consumer prices rose by the biggest margin in 13 years during June, making one think that it would be unlikely for the U.S Federal Reserve to tighten monetary policy in the immediate future. The Cocoa, Sugar, Corn and Soybean markets ended the day on a positive note, the Gold market remained unchanged on the day, while the Coffee, Wheat, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.382 Sterling, at 1.179 the Euro and with the US Dollar buying 5.163 Brazil Real.

The New York and London markets started the day yesterday trading on a modest close to par positive note, both markets were seen to be set on a softer path very early in the morning session, with this being the trend as the late morning session continued. As the afternoon progressed New York and London markets dropped back to hit a floor for the day, the markets rebounded from the lows seen in the early afternoon session to gain some traction late into the day. This upward momentum was soon subdued and the markets were to seen to fall back before the close, which led to a softer close in both the New York and the London markets.

The London market ended the day on a negative note and with 69.23% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 66.81% 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 1717 – 27                                                          SEP 152.25 – 1.75
NOV 1712 – 14                                                        DEC 155.10 – 1.70
JAN 1705 – 8                                                           MAR 157.65 – 1.70
MAR 1691 – 5                                                         MAY 158.95 – 1.70
MAY 1681 – 1                                                         JUL 159.95 – 1.75
JUL 1683 + 1                                                           SEP 160.75 – 1.75
SEP 1690 + 1                                                           DEC 161.65 – 1.75
NOV 1699 + 3                                                         MAR 162.60 – 1.75