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

Coffee Market Report

26 Jul 2022

The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of June to be 14.20% lower than the same month last year, at a total of 530,365 bags. Of this total, Uganda robusta exports registered a total 444,197 bags and 86,168 bags arabica coffee. Cumulative exports were overall 14% lower, whereas an increase of 43% in value terms compared to the same month last year. The UCDA likewise report that the cumulative total exports for the past twelve month period, registered an improved 6.26 million bags exports to consumer markets, and an increase of 3% in volume terms over the same twelve months the year before, as well as a 54% increase in value terms over the prior comparative twelve months. The increased return in value terms reflective to some degree of the improved value in the futures markets, over the same period, with arabica export proceeds contributing to the overall earnings report, where an volume increase of 62.77% similarly translated into 174.46% increase in value. Overall, robusta production and exports continues to dominate Uganda’s export performance and contributed toward 84% of total coffee exports over the country’s July 2021, to June 2022 financial year as reported.

The September 2022 to September 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 120.56 usc/Lb. This equates to 57.40% price discount for the London Robusta coffee market. This wide arbitrage may 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 879 bags on yesterday, to register these stocks at 704,848 bags, with 92.05% of these certified stocks being held in Europe at a total of 648,749 bags and the remaining 7.95% being held in the USA at a total 56,099 Of this, a total 249,000 bags, or 35.33% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 52.39% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.

It was a mixed day on the commodity markets yesterday, the leading in influence oil markets recovered ground as the US Dollar slipped lower. Economists continue to track international inflation data with the next round of US Federal Reserve Bank meetings set to take place mid this week. It was a positive finish to the day for the Wheat, Coffee, Cocoa and Platinum markets, while the Corn, Soybean, Sugar, Gold, Silver and Palladium ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.21 Sterling, at 1.023 the Euro, the US Dollar buying 5.357 Brazil Real.

The coffee markets started the day with a degree of buoyancy and in light volumes, both markets tracked higher through the morning session. As the morning progressed the New York market broke through technical resistance levels though met with sellers at the top of the day, to cap the gains around the same time as the America’s opened their business day. It was a comparatively muted morning for London which mirrored the early moves upward, although gradual and this market traded within a limited range and volume through to the afternoon. The New York market lost the early ground to track back towards par, attracting buyers back to the floor. Another wide range day in New York, the market settled off the day’s high in positive territory, and following a day of combined commercial and speculative support. The London robusta market registered a recovery toward the last minutes of the day though lacking further buying support finished the day, closer to the low of the days’ average trading range and in positive territory.

The London market ended the day on a positive note with 52.38% of the earlier gains of the day intact, while the New York market ended the day on a likewise very positive note with 73.63% of the earlier gains of the day intact. The markets finished the day yesterday in positive territory, against prices set on Friday, as follows:

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

SEP 1973 + 11                                                   SEP 210.05 + 3.35
NOV 1972 + 12                                                 DEC 206.15 + 3.50
JAN 1954 + 10                                                  MAR 202.20 + 3.40
MAR 1939 + 12                                                MAY 199.70 + 3.30
MAY 1934 + 12                                                JUL 197.80 + 3.20
JUL 1930 + 12                                                  SEP 196.15 + 3.25
SEP 1926 + 12                                                  DEC 194.40 + 3.20
NOV 1923 + 10                                                MAR 192.45 + 3.30