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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

03 Dec 2021

The National Coffee Institute of Costa Rica (ICAFE) have reported that the country’s coffee exports for the month of November were 22.60% lower than the same month last year, at a total of 22,793 bags. This they say has contributed to the cumulative coffee exports for the first two months of the current October 2021 to September 2022 coffee year to be 25.18% lower than the same period in the previous coffee year, at a total of 35,056 bags.

Trade within Vietnam has remained slow this week, with coffee deliveries expected to start within the next two weeks. The harvest has been slightly delayed in their seasonal year, due to a continuation of heavy rains within the Vietnam Central Highlands. In the last week heavy rains triggered floods in some parts of the country’s coffee growing regions, many roads including several national highways have been closed off due to the flooding. The Vietnam National Meteorology Centre has reported that there is a low chance for the heavy rains to continue over the next two weeks, a cessation of the rains will soon be required to assist this largest Robusta producer to begin deliveries of the October 2021 to September 2022 coffee crop with minimal disruption.

The world’s largest coffee cooperative Cooxupé, in Brazil, have come forth to report a 26.15% decrease in their projected exports for 2021. The cooperative now expects coffee exports for the 2021 calendar year to total 4.8 million bags, stating bottlenecks in the logistical front with extremely high demand and very short supply of container equipment and space on vessels, which has been compounded over the past months contributing the lower export figure for 2021.

The January 2022 to March 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 130.69 usc/Lb. This equates to 55.24% 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 303 bags yesterday, to register these stocks at 1,587,525 bags, with 95.54% of these certified stocks being held in Europe at a total of 1,516,647 bags and the remaining 4.46% being held in the USA at a total 70,900 bags. Of this, a total 751,190 bags, or 47.32% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 45.98% of these certified coffees, originating from Honduras. There was meanwhile 10,338 bags decrease to the number of bags pending grading to the exchange; to register 75,188 bags pending grading on the day.

It was a firmer day on the commodity markets yesterday, the leading in influence Oil markets were firmer yesterday. The Coffee, Sugar, Cocoa, Corn, Soybean, Wheat, Silver, Platinum and Palladium markets ended the day on a firmer note, while the Gold market ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.329 Sterling, at 1.130 the Euro and with the US Dollar buying 5.646 Brazil Real.

The New York and London markets started the day yesterday trading on a modest near to par firmer note, both markets to oscillate around par for the remainder of the early morning session before attracting a degree of buying support to see the markets trend firmer into the afternoon session. The afternoon session saw the New York market start to add more value and quickly trigger buy stops 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. The momentum of the markets was carried through to the end of the day where the markets hit a ceiling to limit the gains of the day, to settle near to highs of the late afternoon session.

The London market ended the day on a positive note and with 75% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 70.53% of the gains of the day intact. This follow through firmer close with the markets gaining momentum late in the day and settling near to the highs of the day might inspire some degree of 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.

JAN 2335 + 21                                                         MAR 236.60 + 3.35
MAR 2265 + 12                                                       MAY 235.80 + 3.25
MAY 2242 + 11                                                       JUL 234.90 + 3.10
JUL 2240 + 10                                                         SEP 233.75 + 2.80
SEP 2239 + 12                                                         DEC 233.05 + 2.30
NOV 2242 + 12                                                       MAR 232.75 + 2.10
JAN 2250 + 12                                                        MAY 232.55 + 2.05
MAR 2252 + 12                                                       JUL 232.40 + 1.95