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

 

I. & M. Smith (Pty) Ltd.

Coffee Market Report

29 Dec 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 cut their net long position within this market by 8.47% over the week of trade leading up to Tuesday 21st. December; to register a new net long position 50,295 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 1.61%, to register a net long position of 53,787 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector cut their net long position by 7.44% within the market over the week of trade leading up to Tuesday 21st. December:  to register a net long position of 40,972 lots, which is the equivalent of 11,615,380 bags. This net long position has most likely been decreased further following the period of mixed but overall softer 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 11.80% within the market over the week of trade leading up to Tuesday 21st. December: to register a new net long position of 46,190 Lots which is the equivalent of 7,698,333 bags.  This net long position has most likely been increased further following the period of mixed but overall firmer trade that has since followed.

With the month of December almost complete and with the shipment statistics already at hand, the Vietnam General Statistics office have estimated that the coffee exports for the month of December shall be 6.50% lower than the same month last year, at a total of approximately 2,166,667 bags. This they say, shall result in the countries coffee exports for the first three months of the current October 2021 to September 2022 coffee year to be 4.09% lower than the same period last year, at a total of 4,966,667 bags.

The General Statistics office of Vietnam have at the same time estimated that the value of the country’s coffee exports for the 2021 calendar year, shall be 9.40% higher than the same period last year, at a total of approximately 3.00 billion US Dollars.

The March 2022 to March 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 119.32 usc/Lb. This equates to 52.89% 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 5,457 bags yesterday, to register these stocks at 1,541,399 bags, with 95.99% of these certified stocks being held in Europe at a total of 1,479,733 bags and the remaining 4.01% being held in the USA at a total 61,666 bags.  Of this, a total 702,282 bags, or 45.56% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.43% of these certified coffees, originating from Honduras.  There was meanwhile no change to the number of bags pending grading to the exchange; to register 6,700 bags pending grading on the day.

It was a softer day on the commodity markets yesterday, the US Dollar gained ground against a basket of other currencies yesterday, although concerns over rising inflation kept the commodity markets neutral. A stronger US Dollar is seen to be a bearish factor for many of the US Dollar based commodity markets when trading in other currencies The Cocoa, Platinum and Palladium markets ended the day on a firmer note, while the Sugar, Coffee, Soybean, Corn, Wheat, Gold and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.343 Sterling, at 1.130 the Euro and with the US Dollar buying 5.781 Brazil Real.

The New York market started the day yesterday trading on a modest near to par firmer note, while the London market started the day yesterday trading on a modest near to par softer note. Both the New York and London markets would oscillate around par for the remainder of the morning session before attracting a buying support during the late morning session, to see the markets hit a ceiling for the day. As the afternoon progressed the New York and London markets would trend softer heading back towards par before taking a softer track in to the afternoon session.

The New York and London markets continued to drop back and hit a floor late in the day to limit the losses for the day, this saw the New York market settle softer note at the close, while the London market followed suit albeit in a more sedate manner to likewise settle on a near to unchanged modest soft note at the close.

The London market ended the day on a negative note and with 35.71% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 70.73% of the losses of the day intact. This follow through softer close does little to indicate direction nor does it inspire confidence, albeit that the markets recovered some of the earlier losses of the day, one might think that the markets are 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.               

MAR 2343 – 10                                                  MAR 225.60 – 1.45
MAY 2292 – 9                                                     MAY    225.65 – 1.45
JUL 2278 – 7                                                      JUL      225.05 – 1.50
SEP 2273 – 9                                                       SEP    224.20 – 1.65
NOV 2271 – 13                                                    DEC     222.75 – 1.70
JAN 2269 – 15                                                     MAR    222.15 – 1.80
MAR 2264 – 15                                                    MAY    221.65 – 1.85
MAY 2257 – 15                                                    JUL      220.90 – 1.90