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

Coffee Market Report

28 Jul 2022

It has been mostly dry over the main coffee districts in Brazil, what would be considered seasonally normal for this time of year, as the harvest of the biennially bearing larger 2023 Brazil coffee crop continues in the arabica and Conilon robusta areas. Brazil’s largest cooperative Cooxupe, have stated that the coffee harvesting in their area of operation, is at 52.60% when compared to the same time last year at 53.40%. There are similar reports coming to the market to indicate that cherry ripening has been prolonged in the arabica areas, through the southern hemisphere cool winter weather. This is generally considered to be a positive indicative factor for quality in bean development and maturation. The vast areas of coffee growing in Brazil vary in harvesting progress, and Cooxupe have indicated that South Minas Gerais, the largest concentration of coffee farms, are around 58.40% harvested, with Cerrado and Sao Paulo following, at 45.80% and 33.40% respectively.

 

The September 2022 to September 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 128.10 usc/Lb. This equates to 58.46% 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 2,975 bags yesterday, to register these stocks at 700,335 bags, with 91.93% of these certified stocks being held in Europe at a total of 644,262 bags and the remaining 8.07% being held in the USA at a total 56,073 Of this, a total 247,803 bags, or 35.38% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 52.47% 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 in the commodity markets yesterday, ahead of the US Federal Reserve announcements for an additional interest rate increase to be introduced in the worlds’ leading consumer economy. The US Dollar lost ground against a basket of other currencies. The energy sector registered an increase on the day, and a positive finish in the Coffee, Soybean, Wheat, Gold, Silver, Platinum and Palladium markets, while the Cocoa, Sugar and Wheat markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.217 Sterling, at 1.022 the Euro and with the US Dollar buying 5.243 Brazil Real.

 

The New York market started the day yesterday trading on a modest softer note, to the south of par, while the London market started the day yesterday trading on a firmer note. During the early morning session, the New York market gained upward momentum, with the London market following suit to likewise gain momentum tracking firmer for the day. As the afternoon progressed, the New York buoyed by buy stops, with commercial and speculative buyers active, to continue to build through the day. Open interest on the prompt month in New York a hefty 88,220 on 26th July, ahead of first notice day in three weeks’ time. The New York arabica market continued to set high lows as the day, a softer turn at the end as selling activity weighed in at the top , as the session drew to a close. The London market continued in positive territory to settle into a narrow range, and a finish off of the days’ high at the close.

 

The London market ended the day on a positive note with 85% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 84% of the earlier gains of the day intact. This follow through close for the markets might indicate that the coffee markets could see a steady start to early trade today, against the prices set yesterday, as follows:

     

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

SEP  2009 + 35                                              SEP 219.10 + 5.90

NOV  2007 + 33                                             DEC 215.35 + 5.90

JAN  1985 + 30                                                MAR 210.85 + 5.40

MAR  1964 + 25                                               MAY 208.10 + 5.20

MAY 1958 + 23                                            JUL 206.10 + 5.15

JUL 1952 + 21                                            SEP 204.35 + 5.15

SEP 1948 + 21                                            DEC 202.65 + 5.10

NOV 1945 + 21                                          MAR 200.65 + 5.00