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

Coffee Market Report

28 Apr 2022

The July 2022 to July 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 123.38 usc/Lb. This equates to 57.24% 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 9,250 bags yesterday, to register these stocks at 1,126,162 bags, with 95.55% of these certified stocks being held in Europe at a total of 1,076,053 bags and the remaining 4.45% being held in the USA at a total 50,109. Of this, a total 570,354 bags, or 50.65% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.87% of these certified coffees, originating from Honduras. There was meanwhile a 10,155 bags decrease to the number of bags pending grading to the exchange; to register 12,646 bags pending grading on the day.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 9,333 bags over the week of trade leading up to Monday 25th. April to see these stocks registered at 1,552,333 bags, on the day.

It was a mixed day on the commodity markets yesterday, after the US Dollar rallied for a second consecutive day on expectations of aggressive monetary policy tightening from the US Federal Reserve, strength in the 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, Sugar, Soybean, Corn and Palladium markets ended the day on a positive note, while the Coffee, Wheat, Gold, Silver and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.251 Sterling, at 1.051 the Euro and with the US Dollar buying 4.964 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 trading on softer note. Both markets were buoyed by buying support early in the day to track firmer and oscillate around par for the remainder of the morning session. During the Mid-morning session, the markets encountered resistance to drop back from the early highs of the day and be seen to be set on a softer path for the remainder of morning session. As the afternoon progressed the New York market attracted a degree of long liquidation pressure to see the market trend softer for the remainder of the afternoon session. The London market followed suit, in a more sedate manner. The late afternoon session saw New York market continue to make losses before hitting a floor late in the day to limit the losses. This saw the market settle on a very soft note at the close. While the London market recovered half of the earlier losses of the day to settle on a modest softer note at the close.

The London market ended the day on a negative note with 52.38% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 84.85% of the earlier losses of the day intact. This softer close for the markets does little to indicate direction and with the New York losing ground late in the day to settle near to the lows of the day, one might think that the markets are due for a steady start to early trade today, against the prices set yesterday, as follows:

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

JUL 2032 – 22                                              JUL 215.55 – 5.60
SEP 2041 – 20                                              SEP 215.50 – 5.50
NOV 2044 – 19                                            DEC 215.05 – 5.50
JAN 2040 – 19                                             MAR 214.10 – 5.45
MAR 2036 – 19                                           MAY 213.00 – 5.35
MAY 2032 – 19                                           JUL 211.15 – 5.30
JUL 2031 – 19                                             SEP 208.55 – 5.30
SEP 2027 – 19                                             DEC 205.90 – 5.30