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

Coffee Market Report

21 Feb 2022

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector increased their net long position by 4.63% within the market over the week of trade leading up to Tuesday 15th. February 2022: to register a net long position of 53,279 lots, which is the equivalent of 15,104,360 bags. This net long position has most likely been marginally increased following the period of mixed but overall, firmer 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 increase their net long position by 13.16% within the market over the week of trade leading up to Tuesday 15th. February 2022: to register a new net long position of 35,059 Lots which is the equivalent of 5,843,167 bags.  This net long position has most likely been little changed following the of mixed but overall sideways trade that has since followed.

The consultancy and commodity broker StoneX has come forth with their report to forecast Brazil coffee production could potentially be around 58.90 million bags the coming July 2022 to June 2023 coffee year. The forecast anticipates 38.30 million bags to come from this leading producer of mostly natural arabica coffee, along with an estimated 20.60 million bags Conilon robusta coffee.

The May 2022 to May 2022 contract arbitrage between the London and New York markets narrowed on Friday to register this 143.71 usc/Lb. This equates to 58.42% 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 9,304 bags on Friday, to register these stocks at 1,007,325 bags, with 94.32% of these certified stocks being held in Europe at a total of 950,086 bags and the remaining 5.68% being held in the USA at a total 57,239. Of this, a total 366,366 bags, or 36.37% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 53.49% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 100,254 bags pending grading on the day.

It was a mixed day on the commodity markets on Friday, as inflationary pressures around the globe weighed on the commodity market basket. The mounting concerns surrounding geopolitical tensions in Eastern Europe, adding a bullish track to Oil and energy markets. The Corn, Soybean and Silver markets ended the day on a firmer note, while the Sugar, Coffee, Cocoa, Wheat, Gold, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.362 Sterling, at 1.136 the Euro and with the US Dollar buying 5.137 Brazil Real.

The New York and London markets started the day on Friday trading on a near to par firmer note. Both markets were seen to quickly attract selling pressure and set on a softer path for the remainder of the morning session. As the afternoon progressed the markets would gain support to see the London market bounce off the lows of the day and recover some of the losses, while the support in New York was short lived. With the market encountering resistance during the early afternoon session.

The afternoon session saw the New York market attracted a degree of long liquidation pressure to see the market trend softer for the remainder of the day. The London market followed suit albeit in a more sedate manner to see both markets settle on a softer note at the close.

The London market ended the day on a negative note with 67.86% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 60% of the earlier losses of the day intact. The New York market is closed today for the U.S.A. Presidents Day holiday, which is observed in not all but many of the States, and shall leave the London market trading solo for the day. One might think that this shall slow trade within the London market for the day, and one might think the market is 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.

MAY 2255 – 19                                         MAY 246.00 – 4.65
JUL 2235 – 16                                           JUL 244.70 – 4.45
SEP 2224 – 12                                           SEP 243.15 – 4.15
NOV 2220 – 11                                         DEC 240.20 – 3.90
JAN 2218 – 10                                          MAR 237.45 – 3.70
MAR 2216 – 10                                        MAY 235.50 – 3.25
MAY 2216 – 10                                        JUL 232.95 – 2.70
JUL 2217 – 10                                          SEP 230.00 – 2.60