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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

19 Apr 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 raise their net long position within this market by 18.48% over the week of trade leading up to Tuesday 12th. April; to register a new net long position 36,757 Lots. Meanwhile the longer term in nature Index Fund sector of this market also raised their net long position within the market by 1.24%, to register a net long position of 40,118 Lots on the day.

Over the same week, the Non-Commercial Speculative sector raise their net long position by 26.60% within the market over the week of trade leading up to Tuesday 12th. April: to register a net long position of 29,617 lots, which is the equivalent of 8,396,288 bags. This net long position has most likely been little changed following the period of mixed but overall sideways softer trade that has since followed.

The Green Coffee Association of the U.S.A. have announced that the country’s port warehouse stocks increased by 54,950 bags or 0.89% during the month of March, to register these stocks at 6,820,298 bags at the end of the month. Of this total, 50,109 bags were registered in the U.S. Certified coffee stock warehouses at the time of reporting. The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 590,000 bags per week, would conservatively have been at least 1.2 million bags. 

Following the erroneous report by the Green Coffee Association of the U.S.A of an increase in green coffee stocks during the month of February, which was subsequently corrected, to have in fact registered a decrease of 30,493 bags., the reported increase in coffee stocks at the end of March 2022 marks the first increase in U.S Green Coffee Stock Levels since August 2021. The U.S Green Coffee stock levels have fallen for six consecutive months previously amid the global logistics challenges and so long as the logistics situation allows, may see further increases in stock levels during the months to come.

The July 2022 to July 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 128.54 usc/Lb. This equates to 57.45% 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 remain unchanged yesterday, to register these stocks at 1,080,558 bags, with 95.36% of these certified stocks being held in Europe at a total of 1,030,449 bags and the remaining 4.64% being held in the USA at a total 50,109. Of this, a total 543,045 bags, or 50.26% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.90% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 55,883 bags pending grading on the day.

Following the closure of the markets for the long weekend national holiday celebrations in many countries on Friday, the London commodity markets remained closed for the day yesterday, to leave the U.S. markets to trade solo for the day. The Sugar, Corn, Soybean, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on a positive note, while the Cocoa and Coffee markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.299 Sterling, at 1.077 the Euro and with the US Dollar buying 4.653 Brazil Real.

The New York market traded solo yesterday and started the day trading on a very negative note, the market quickly dropped further back to hit a floor, limiting the losses for the day’s trade. As the afternoon progressed the New York market bounced off the morning lows to trend in a firmer direction, recovering somewhat. The New York market would be seen to settle on a modest near to par softer note at the close.

The London market ended the day on a Thursday on a modest near to unchanged negative note with 16.67% of the earlier losses of the day intact, while the New York market ended the day yesterday on a likewise modest near to unchanged negative note with 2.77% of the earlier losses of the day intact. This modest softer close for the New York market does little to indicate direction and with first notice approaching in New York for the prompt month on 21st April, one might think that the markets may possibly be set for a hesitant steady start to early trade today, against the prices set in New York yesterday and in London on Thursday, as follows:

Close: 14/04/2022                                      Close: 18/04/2022

MAY 2087 – 4                                           MAY 223.50 – 0.10
JUL 2099 – 6                                             JUL 223.75 Unch
SEP 2102 – 7                                             SEP 223.65 – 0.05
NOV 2103 – 7                                           DEC 223.10 + 0.05
JAN 2101 – 9                                            MAR 222.10 + 0.30
MAR 2098 – 10                                        MAY 220.80 + 0.35
MAY 2094 – 10                                        JUL 218.65 + 0.40
JUL 2091 – 10                                           SEP 215.85 + 0.45