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

Coffee Market Report

11 Aug 2021

The Coffee Exporters Association in Brazil Cecafé have reported that the countries green coffee exports for the month of July were 12.43% lower than the same month last year, to total 2.51 million bags, this number made up of 2.11 million bags of arabica coffee down 12.73% from the same month last year and 399,611 bags of Conilon robusta coffee down 10.83% from the same month last year. This is the first month of the new July 2021 to June 2022 coffee year, with this harvest near to completion one might anticipate growing numbers in export reports to consumer markets, in the months ahead.

The September-to-September contract arbitrage between the London and New York markets narrowed yesterday to register this at 97.72 usc/Lb. This equates to 53.69% 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 2,151 bags yesterday, to register these stocks at 2,161,387 bags, with 93.92% of these certified stocks being held in Europe at a total of 2,030,002 bags and the remaining 6.08% being held in the USA at a total 131,385 bags. Of this, a total 1,145,541 bags, or 53.00% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.28% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 7,737 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 16,111 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 26,000 bags over the week of trade leading up to Monday 9th. August to see these stocks registered at 2,373,667 bags, on the day.

It was a firmer day on the commodity markets yesterday, as investors became weary of the economic impact of the new Delta Covid-19 variant in the USA, although a rally in the US Dollar against a basket of other currencies subdued strong gains in the session. The Sugar, Cocoa, Coffee, Corn, Soybean, Gold, Platinum and Palladium markets ended the day on a positive note, while the Wheat and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.383 Sterling, at 1.172 the Euro and with the US Dollar buying 5.190 Brazil Real.

The New York and London markets started the day yesterday trading on a modest softer note, both markets would oscillate either side of par before dropping back to hit a floor for the day during the early morning session. As the afternoon progressed both the New York and the London markets started to gain momentum, buoyed by a large degree of buying support which saw buy stops triggered along the way as the markets trended firmer. This saw both the New York and London markets hit new highs late in the day to see both markets settle near to the highs of the day at the close.

The London market ended the day on a very positive note and with 91.25% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 91.38% of the gains of the day intact. This firmer close and with both the New York and the London markets settling near to the highs of the day, might inspire some degree of follow through confidence to possibly set the markets for a steady start to early trade today, against the prices set yesterday, as follows:

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

SEP 1858 + 73                                                          SEP 182.00 + 2.65
NOV 1863 + 66                                                        DEC 185.10 + 2.65
JAN 1855 + 60                                                         MAR 187.80 + 2.70
MAR 1848 + 54                                                       MAY 188.95 + 2.80
MAY 1842 + 48                                                       JUL 189.80 + 2.90
JUL 1840 + 48                                                         SEP 190.45 + 2.90
SEP 1841 + 47                                                         DEC 191.35 + 2.95
NOV 1849 + 44                                                       MAR 192.10 + 2.90