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

Coffee Market Report

19 Dec 2019

The International Coffee Organisation ICO have reported that the global coffee exports for the month of October were 13.4% lower than the same month last year, at a total of 8.91 million bags, the ICO forecasts Global Coffee production for the October 2019 to September 2020 coffee year to be 167.40 million bags. These exports related to a 9.0% decrease in arabica coffee exports and a 21.6% decrease in robusta coffee exports. Primarily attributed to the leading coffee producer nation, Brazil who has seen a large decrease in reported exports for this month compared to the larger biennial bearing production in 2018 coffee year, to similarly reflect the increased exports of Conilons robustas, to consumer markets over the same month in the previous year.

The same ICO report has estimated that global coffee consumption will have risen for this present October 2019 to September 2020 coffee year to 167.91 million bags, which is marginally above what they estimate to be the coffee supply for this coffee year. However, they estimate that global coffee consumption is rising by approximately 2.1% per annum and in this respect, would indicate that global coffee consumption for the coming October 2020 to September 2021 coffee year shall exceed 171 million bags.

The March to March contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 69.29 usc/Lb. This equates to 52.02% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 875 bags yesterday; to register these stocks at 2,027,917 bags, with 88.41% of these certified stocks being held in Europe at a total 1,792,873 bags and the remaining 11.59% being held in USA certified warehouses, at a total 235,044 bags. There was meanwhile 3,705 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 22,268 bags.

The commodity markets were mostly softer in trade yesterday, to see the overall macro commodity index taking a soft sideways track for the day. The Oil, Sugar, Cotton and Orange Juice markets ended the day on a positive note, while the Natural Gas, Cocoa, Coffee, Copper, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.2056% lower; to see this index registered at 416.2540. The day starts with the U.S. Dollar steady, trading at 1.308 to Sterling, at 1.113 to the Euro and with the US Dollar buying 4.063 Brazilian Real.

The London and New York markets started the day yesterday trading on a modest positive note. Both markets maintained this positive track into the early afternoon trade. As the afternoon progressed both The London and the New York markets started to attract selling pressure to move into modest negative territory. started to attract selling pressure to move into negative territory for the early afternoon trade. The London market maintained these modest soft levels to close near the lows for the day, while the New York market hit a price floor and bounced back to limit the losses for the day.

The London market ended the day on a negative note, and with 87.5% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note, and with 14.3.% of the earlier losses of the day intact. This close provides little in the way of direction and one would think to see another low volume hesitant steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                                NEW YORK ARABICA USc/Lb.

JAN 1384 – 22                                                            MAR 133.20 – 0.50
MAR 1409 – 7                                                            MAY 135.40 – 0.45
MAY 1426 – 7                                                            JUL 137.30 – 0.35
JUL 1444 – 6                                                              SEP 138.95 – 0.30
SEP 1463 – 5                                                              DEC 140.95 – 0.20
NOV 1482 – 5                                                            MAR 142.85 – 0.20
JAN 1501 – 6                                                              MAY 143.90 – 0.25
MAR 1525 – 7                                                            JUL 144.90 – 0.45
MAY 1548 – 6                                                            SEP 145.85 – 0.70