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

Coffee Market Report

25 Jan 2022

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 increase their net long position within this market by 7.73% over the week of trade leading up to Tuesday 18th. January; to register a new net long position 54,221 Lots.  Meanwhile the longer term in nature Index Fund sector of this market cut their net long position within the market by 6.97%, to register a net long position of 44,938 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector increased their net long position by 11.22% within the market over the week of trade leading up to Tuesday 18th. January: to register a net long position of 47,856 lots, which is the equivalent of 13,566,964 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 March 2022 to March 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this 133.30 usc/Lb. This equates to 57.22% 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 15,534 bags yesterday, to register these stocks at 1,342,791 bags, with 95.50% of these certified stocks being held in Europe at a total of 1,282,325 bags and the remaining 4.50% being held in the USA at a total 60,466. Of this, a total 575,358 bags, or 42.85% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 49.53% of these certified coffees, originating from Honduras. There was meanwhile 3,973 bags increase to the number of bags pending grading to the exchange; to register 47,638 bags pending grading on the day.

It was a softer day on the commodity markets yesterday, as the US Dollar gained ground against a basket of other currencies, concerns reflected within the markets surrounding increased geopolitical tensions between Russia and the Ukraine. The Corn, Wheat, Gold and Palladium markets ended the day on a firmer note, while the Sugar, Cocoa, Coffee, Soybean, Silver and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.348 Sterling, at 1.131 the Euro and with the US Dollar buying 5.488 Brazil Real.

The New York market started the day yesterday trading on a negative note, while the London market started the day yesterday trading on a modest near to par firmer note. Both the markets would quickly attract a degree of selling pressure and be seen to be set on a softer path for the remainder of the morning session. The New York would briefly recover from the morning lows and trend towards par, with the London market following suit in a more sedate manner. As the afternoon progressed the markets would encounter long liquidation pressure to see both the New York and London markets trend lower into the afternoon session

The late afternoon session saw the New York market bounce off the lows of the day and recover some of the losses to see the market settle on a very softer note at the close, with the London market following suit albeit in a more sedate manner to likewise settle on a softer note at the close.

The London market ended the day on negative note with 59.26% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 66.44% of the earlier losses of the day intact. This follow through softer close, albeit that the markets recovered some of the earlier losses of the day does little to indicate direction and one might think that the markets are due for little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:      

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

MAR    2197 – 16                                               MAR   232.95 – 4.95
MAY   2166 – 13                                              MAY      233.25 – 4.85
JUL   2156 – 14                                                  JUL       232.55 – 4.65
SEP  2155 – 12                                                   SEP      231.70 – 4.55
NOV  2155 – 11                                                   DEC      230.05 – 4.50
JAN  2154 – 11                                                   MAR     229.15 – 4.45
MAR   2154 – 11                                                 MAY     228.20 – 4.50
MAY 2148 – 11                                           JUL 226.70 – 4.55