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

Coffee Market Report

20 Dec 2021

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector cut their net long position by 5.14% within the market over the week of trade leading up to Tuesday 14th. December:  to register a net long position of 44,264 lots, which is the equivalent of 12,548,648 bags. This net long position has most likely been little changed following the period of mixed but overall sideways trade that has since followed.

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this market raise their net long position by 4.86% within the market over the week of trade leading up to Tuesday 14th. December: to register a new net long position of 41,315 Lots which is the equivalent of 6,885,833 bags.  This net long position has most likely been increased further following the period of mixed but overall firmer trade that has since followed.

The March 2022 to March 2022 contract arbitrage between the London and New York markets widened on Friday to register this at 128.93 usc/Lb. This equates to 54.92% 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 1,225 bags on Friday, to register these stocks at 1,555,363 bags, with 95.84% of these certified stocks being held in Europe at a total of 1,490,722 bags and the remaining 4.16% being held in the USA at a total 64,641 bags.  Of this, a total 714,071 bags, or 45.91% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.10% of these certified coffees, originating from Honduras.  There was meanwhile a 5,865 bags decrease to the number of bags pending grading to the exchange; to register 6,375 bags pending grading on the day.

It was a firmer day on the commodity markets on Friday, as investors remain cautious over the effect of new Covid-19 variants on short term economic growth. The London Robusta Coffee, Wheat, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a firmer note, while the Sugar, Cocoa, New York Arabica Coffee and Corn markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.323 Sterling, at 1.125 the Euro and with the US Dollar buying 5.696 Brazil Real.  

The New York and London markets started the day on Friday trading on a modest near to par firmer note. The New York market quickly attracted selling pressure to see the market set on a softer path for the remainder of the early morning session, while the London market buoyed by a degree of buying support trended firmer for the remainder of the morning session. As the afternoon progressed the New York market would be seen to gain support, however this was short lived as the market quickly hit a ceiling limiting the gains for the day.

The London market continued on a firmer path to hit a ceiling late in the day, which saw the market settle near to highs of the day at the close. While the New York market dropped back set on a softer path for the remainder of the late afternoon session, which saw the market carry through this softer momentum to the close, to settle on a negative note.

The London market ended the day on a positive note and with 79.07% of the gains of the day intact, while the New York market ended the day on a negative note and with 73.68% of the losses of the day intact. This mixed close does little to indicate direction, with the New York market settling near to the lows 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 on Friday, as follows:      


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

MAR 2333 + 34                                                   MAR 234.75 – 2.10
MAY 2288 + 25                                                    MAY    234.85 – 2.15
JUL 2281 + 21                                                     JUL      234.35 – 2.20
SEP 2276 + 9                                                        SEP    233.30 – 2.40
NOV 2275 + 1                                                       DEC     231.80 – 2.40
JAN 2277 – 2                                                        MAR    231.05 – 2.50
MAR 2273 – 2                                                      MAY    230.35 – 2.40
MAY 2266 – 2                                                      JUL      229.55 – 2.25