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

Coffee Market Report

26 Nov 2021

The respected United States Department of Agriculture USDA Global Agricultural Information Network have revised their midyear estimate for the October 2021 to September 2022 Colombian coffee crop production, lower by 2.13% at a total 13.80 million bags. The report makes reference to the La Niña weather phenomenon which unusually cold temperatures in the equatorial Pacific Ocean and excessive rains for the Pacific Rim countries such as Colombia, which could potentially have a negative impact upon coffee crop production should this trend continue. The report further anticipates green coffee exports from this fine washed arabica producing country to reach 12.30 million bags in the October 2021 to September 2022 coffee year, up 4.24% from the previous coffee year.

Colombia remains the leading and largest quality washed arabica coffee producer to the markets, with the USDA reporting that internal market prices within this fine washed arabica country have reached record historical highs. The country has weathered to some extent the perpetual year on year soft reference prices of the coffee terminal markets of the past seven years, while the latest developments in the coffee futures markets has seen the New York arabica futures market gain over 80% in value since January 2021. Colombia’s currency the Peso has meanwhile lost 14.58% of value against the US Dollar over the same period. This latter, has had an inflationary influence to bring about an increase to production costs as a result of the implementation of sanitary measures, increasing costs of imports, labour and inputs required for their crops.

There are reports across primary European coffee consumer markets meanwhile, of stricter Covid19 related restrictions being implemented once again, in many countries. Within the coffee consumption context, this may be seen to give rise to concerns once again in the already severely affected HORECA sector, where out of home coffee consumption and traditional café culture may once again be negatively impacted.

The January 2022 to March 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 140.49 usc/Lb. This equates to 57.47% 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 remain unchanged yesterday, with the markets closed for the Thanksgiving Holiday, to register these stocks at 1,680,887 bags, with 95.76% of these certified stocks being held in Europe at a total of 1,609,617 bags and the remaining 4.24% being held in the USA at a total 71,270 bags. Of this, a total 845,600 bags, or 50.31% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 43.52% of these certified coffees, originating from Honduras. There was meanwhile an increase of 4,175 bags to the number of bags pending grading to the exchange; to register 76,594 bags pending grading on the day.

The U.S. A. commodity markets were closed yesterday in observance of the Thanksgiving Day public holiday, noting some degree of buoyancy for the markets that were trading yesterday. The London Robusta Coffee, Gold, Silver, Platinum and Palladium markets ended the day on a firmer note, the Sugar market remained unchanged on the day, while the Cocoa market ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.330 Sterling, at 1.122 the Euro and with the US Dollar buying 5.566 Brazil Real.

The London market, trading solo for the day, started the day trading on a firmer note. The market continued to gain momentum during the early morning session. As the afternoon progressed the market would hit a ceiling limiting the gains for the day, this saw the London market briefly come under a degree of selling pressure to fall back off the initial highs of the day before gaining support late in the day to settle on a modest firmer note at the close.

The London market ended the day yesterday on a modest positive note and with 68.75% of the gains of the day intact, while the New York market ended the day New York market ended the day on Wednesday on a likewise positive note and with 39.02% of the gains of the day intact. This modest firmer close might inspire some degree of confidence, with the New York market returning to the field of play today one might think the markets are due for a hesitant steady start to early trade today against the prices set in New York on Wednesday and in London yesterday, as follows:


LONDON ROBUSTA US$/MT                             NEW YORK USC/LB.
Close 25/11/2021                                                     Close 24/11/2021

JAN 2292 + 11                                                         MAR 244.45 + 2.40
MAR 2228 + 6                                                         MAY 244.10 + 2.55
MAY 2199 + 7                                                         JUL 243.40 + 2.30
JUL 2195 + 8                                                           SEP 242.70 + 2.05
SEP 2191 + 9                                                           DEC 243.00 + 2.05
NOV 2193 + 9                                                         MAR 243.30 + 2.05
JAN 2201 + 9                                                          MAY 243.35 + 2.10
MAR 2199 + 9                                                         JUL 243.35 + 2.20