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

Coffee Market Report

05 Nov 2021

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of October was 147,000 bags or 12.68% lower than the same month last year, at a total of 1,012,000 bags. The report likewise estimates that the country’s coffee production at the end of 2021 calendar year is expected to reach between 13 million and 13.50 million bags, this number below the 13.90 million bags produced during the 2020 calendar year.

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of October were 66,000 bags or 6.27% lower than the same month last year, at a total of 986,000 bags.

The new crop harvest in Vietnam has started, albeit that there may be slight delays to their seasonal year, due to pandemic related restrictions and quarantine requirements. The harvest was expected to pick up by the second half of November however labour shortages and travel restrictions between provinces has caused a slight delay to the harvest time.

Meanwhile weather reports coming forth from Brazil indicate that seasonal rains will intensify across the vast areas of the Brazil arabica coffee growing regions over the next week. These rains proving important and necessary in order to adequately set the cherries for the next biennial bearing crop to come.

The January 2022 to December 2021 contract arbitrage between the London and New York markets widened yesterday to register this at 108.63 usc/Lb. This equates to 52.08% 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 15,211 bags yesterday, to register these stocks at 1,849,501 bags, with 95.52% of these certified stocks being held in Europe at a total of 1,766,574 bags and the remaining 4.48% being held in the USA at a total 82,927 bags. Of this, a total 958,029 bags, or 51.80% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 42.16% of these certified coffees, originating from Honduras. There was meanwhile a decrease of 10,586 bags to the number of bags pending grading to the exchange; to register 10,469 bags pending grading on the day.

It was a firmer day on the commodity markets yesterday, as the US Federal Reserve announced that they would not be rushing into raising interest rates but rather a measured approach would be taken over the coming months. The Sugar, Cocoa, Gold, Silver, Platinum and Palladium markets ended the day on a firmer note, while the Coffee, Corn, Wheat and Soybean markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.350 Sterling, at 1.155 the Euro and with the US Dollar buying 5.602 Brazil Real.

The New York and London markets started the day yesterday trading on a modest firmer note, the New York market was seen to oscillate around par trending firmer throughout the remainder of the morning session, while the London market dropped back weighed by selling pressure early in the day, late in the morning session saw the London market recover from the early lows and trade on a positive note. As the afternoon progressed both the New York and the London markets were seen to hit a ceiling, limiting the gains for the day. The markets weighed by selling pressure were set on a softer path for the remainder of the day’s trade. This saw the New York market settle on a softer note, with the London market following suite at the close.

The London market ended the day on a negative note and with 75.68% of the losses of the day intact, while the New York market ended the day on a likewise modest near to par negative note and with 21.21% of the earlier losses of the day intact. This softer close does little to indicate direction nor does it inspire any degree of follow through confidence, albeit that the markets recovered some of the earlier losses of the day, one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set yesterday, as follows:

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

JAN 2204 – 28                                                         DEC 208.60 – 0.70
MAR 2154 – 21                                                       MAR 211.45 – 0.70
MAY 2127 – 18                                                       MAY 212.10 – 0.45
JUL 2117 – 17                                                          JUL 212.10 – 0.60
SEP 2108 – 17                                                         SEP 212.10 – 0.60
NOV 2109 – 12                                                        DEC 212.15 – 0.60
JAN 2117 – 11                                                         MAR 212.35 – 0.60
MAR 2115 – 11                                                       MAY 212.50 – 0.60