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

Coffee Market Report

20 Jul 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 7.94% over the week of trade leading up to Tuesday 13th. July; to register a new net long position 28,190. Meanwhile the longer term in nature Index Fund sector of this market cut their net long position within the market by 1.28%, to register a net long position of 72,899 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 10.81% to register a new net long position 20,839 Lots, which is the equivalent of 5,907,764 bags. This net long position has most likely been increased following the period of firmer trade that has since followed.

The September-to-September contract arbitrage between the London and New York markets narrowed yesterday to register this at 77.84 usc/Lb. This equates to 49.77% 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 695 bags yesterday, to register these stocks at 2,187,463 bags, with 93.65% of these certified stocks being held in Europe at a total of 2,048,628 bags and the remaining 6.35% being held in the USA at a total 138,835 bags. Of this, a total 1,150,741 bags, or 52.61% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.80% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 2,615 bags increase to the number of bags pending grading to the exchange; to register these pending grading stocks at 21,665 bags.

It was a softer day on the commodity markets yesterday, as the global commodity markets were pressured by the US Dollar that rallied against many of the world’s major currencies, which offset indicators that treasury yields dropped to their lowest point since February this year. The Wheat and Corn markets ended the day on a positive note, while the Sugar, Coffee, Cocoa, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.367 Sterling, at 1.179 the Euro and with the US Dollar buying 5.252 Brazil Real.

The New York and London markets started the day yesterday trading on a modest close to par firmer note. Both markets attracted a degree of selling pressure early in the day to see the markets drop back and set on a softer path for the remainder of the morning session. As the afternoon progressed the New York and London markets consolidated somewhat to recover from the morning and trend back towards par, this was short lived as the New York market quickly came under a large degree of selling pressure which saw the market extend its losses for the day, while the London market continued on an upward trajectory for the afternoon session. The London market came under a degree of selling pressure late in the day, as both markets fell back to settle near to the lows of the day’s trade at the close.

The London market ended the day on a negative note and with 92.12% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 86.84% of the losses of the day intact. This softer close was somewhat expected, as the markets consolidate from the rally on Friday. There is likely to still 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 1732 – 35                                                           SEP 156.40 – 4.95
NOV 1733 – 23                                                         DEC 159.35 – 4.75
JAN 1719 – 17                                                          MAR 161.75 – 4.60
MAR 1705 – 13                                                        MAY 162.90 – 4.45
MAY 1699 – 11                                                        JUL 163.80 – 4.35
JUL 1702 – 9                                                            SEP 164.45 – 4.30
SEP 1710 – 9                                                            DEC 165.20 – 4.25
NOV 1720 – 9                                                          MAR 165.80 – 4.25