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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

03 Mar 2020

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 cut their net short position within the market by 9.44% over the week of trade leading up to Tuesday 25th. February; to register a new net short position of 15,083 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 2.5%, to register a net long position of 47,745 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within the market by 1.8%; to register a new net short position of 16,229 Lots which is the equivalent of 4,600,850 bags. This position has most likely been decreased, following the period of mixed but overall sideways trade that has since followed.

The General Statistics Office of the Vietnam have forecast that with the month of February over now, that the countries coffee exports for the month shall be 31.1% higher than the same month last year, at a total of approximately 2.5 million bags. this comparatively higher export performance month on month from Vietnam can be attributed to the low period of activity within the interior over the festive Tet Lunar New Year, observed in February last year. The General Statics office in Vietnam have meanwhile, estimated that the countries revenue from coffee exports for the first two months of the calendar year shall be 9.8% lower than the same period last year at a total of 7 million.

Rabobank have reported that they expect the upcoming Brazil 2020/2021 coffee crop to total 67.5 million bags, this number compromising of a record 49 million bags of Arabica Coffee and 18.5 million bags of Conilon Robusta Coffee. The larger crop can be attributed to the Biennial bearing nature of the Brazil Coffee Crop.

The May to May contracts arbitrage between the London and New York markets broadened yesterday; to register this at 57.04 usc/Lb. This equates to 49.34% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,200 bags yesterday; to register these stocks at 2,136,949 bags, with 89.6% of these certified stocks being held in Europe at a total of 1,914,733 bags and the remaining 10.4% being held in the USA at a total of 222,216 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags.

The commodity markets were mixed in trade yesterday, to see overall macro commodity index taking a soft sideways track for the day. The Oil, Natural Gas, Coffee, Cotton, Copper, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Sugar, Cocoa and Wheat markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.70% higher; to see this index registered at 387.1891. The day starts with the U.S. Dollar steady, trading at 1.278 to Sterling, at 1.115 to the Euro and with the US Dollar buying 4.474 Brazilian Real.

The London and New York markets started the day yesterday trading on modest positive note, both markets continued on this positive track into the early afternoon trade. As the afternoon progressed the New York market started to attract buying support to move deeper into positive territory where the market hit a ceiling a dropped back from the highs of the day to settle in positive territory, while the London market followed suit in a more sedate manner.

The London market ended the day on a positive note and with 38% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 65.9% of the earlier gains of the day intact. This very positive close might inspire some degree of confidence to set the markets for a follow-through hesitant steady start for early trade today, against the prices set yesterday, as follows:

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

MAR 1265 + 8                                                                         MAR 114.65 + 4.55
MAY 1291 + 8                                                                         MAY 115.60 + 4.25
JUL 1310 + 8                                                                           JUL 117.50 + 4.25
SEP 1327 + 6                                                                           SEP 119.30 + 4.30
NOV 1345 + 6                                                                         DEC 121.60 + 4.25
JAN 1361 + 6                                                                           MAR 123.75 + 4.30
MAR 1377 + 6                                                                         MAY 125.10 + 4.40
MAY 1397 + 5                                                                         JUL 126.30 + 4.50
JUL 1418 + 5                                                                           SEP 127.45 + 4.60