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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

02 Nov 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 increase their net long position within this market by 0.97% over the week of trade leading up to Tuesday 26th.October; to register a new net long position 52,351 lots. 

Over the same week, the Non-Commercial Speculative sector of this market decrease their net long position within the market by 1.06% to register a new net long position 44,585 lots, which is the equivalent of 12,717,044 bags. This net long position has most likely been increased marginally following the period of mixed but overall firmer trade that has since followed.

The National Coffee Institute of Costa Rica (ICAFE) have reported that the country’s coffee exports for the month of October were 29.60% lower than the same month last year, at a total of 12,263 bags. ICAFE have also reported that during the October 2020 to September 2021 coffee year, cumulative coffee exports from Costa Rica were registered at 2.16% higher than the same period in the previous coffee year, at a total of 1.16 million bags.

Today is the Dia de Finados (All Souls’ Day) public holiday in Brazil which shall most likely keep most internal market players out of the market today.

The January 2022 to December 2021 contract arbitrage between the London and New York markets widened yesterday to register this at 105.78 usc/Lb. This equates to 50.69% 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 decrease by 2,489 bags yesterday, to register these stocks at 1,877,375 bags, with 95.57% of these certified stocks being held in Europe at a total of 1,794,123 bags and the remaining 4.43% being held in the USA at a total 83,252 bags. Of this, a total 996,484 bags, or 53.08% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 41.22% of these certified coffees, originating from Honduras. There was meanwhile a decrease of 2,646 bags to the number of bags pending grading to the exchange; to register 38,140 bags pending grading on the day.

It was a firmer day on the commodity markets yesterday, the US Dollar eased pressure against a basket of other currencies. A weaker US Dollar is seen to be a bullish factor for many of the US Dollar based commodity markets when trading in other currencies, as investors await the outcome from the US Federal Reserve policy meeting due to be held later this week. The Sugar, Coffee, Wheat, Corn, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a firmer note, while the Cocoa market ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.366 Sterling, at 1.160 the Euro and with the US Dollar buying 5.680 Brazil Real.

The New York and London markets started the day yesterday trading on a modest near to par firmer note, both markets continued on this firmer path for the remainder of the early morning session which saw the markets trend firmer into the afternoon. As the afternoon progressed the New York market started to add more value and with buy stops triggered along the way to accentuate the gains for the day. The London market followed suit with the influence of further weight being added within the New York market, to likewise add more value and gain momentum throughout the session. Both markets were seen to hit a resistance level during the late which saw the markets drop back from the earlier in the day highs and settle on a very firm note at the close.

The London market ended the day on a positive note and with 90.16% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 80.51% of the earlier gains of the day intact. This follow through firmer close, with the markets settling near to the highs of the day might inspire confidence and a degree of follow through support 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.

JAN 2269 + 55                                                         DEC 208.70 + 4.75
MAR 2192 + 32                                                       MAR 211.45 + 4.80
MAY 2155 + 24                                                       MAY 211.85 + 4.65
JUL 2141 + 20                                                         JUL 212.15 + 4.55
SEP 2136 + 16                                                         SEP 212.25 + 4.50
NOV 2134 + 14                                                       DEC 212.35 + 4.55
JAN 2141 + 14                                                        MAR 212.50 + 4.60
MAR 2139 + 14                                                      MAY 212.65 + 4.70