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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

09 Jun 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 switch their net long position within the market to a new net short position over the week of trade leading up to Tuesday 2nd.June; to register a new net short position of 6,623 Lots, which is the equivalent of 1,877,59 Bags. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.38%, to register a net long position of 42,931 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market switch their net long position within the market to a new net short position within the market, to register a new net short position of 11,163 Lots which is the equivalent of 3,164,661 bags. This new net short position has most likely been dramatically increased, following the period of overall softer trade that has since followed.

Weather conditions in Brazil have been reported to be dry across much of the coffee growing districts. There were reports of a wet cold front that was due to reach the coffee growing regions in the South East of the coffee belt this week, however forecasters suggest that this wet cold front has since dissipated over the weekend and the large majority of the coffee belt is forecast to remain dry for the coming days.

The July to July contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 42.20 usc/Lb. This equates to 42.67% 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 3,653 bags yesterday; to register these stocks at 1,740,933 bags, with 91.1% of these certified stocks being held in Europe at a total of 1,584,771 bags and the remaining 8.9% being held in the USA at a total of 156,162. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,489 bags.

The commodity markets were slightly firmer in trade yesterday, to see the overall macro commodity index taking a sideways track for the day. The Cocoa and London Robusta Coffee markets ended the day on a positive note, the New York Arabica Coffee market remained unchanged for the day, while the Sugar market ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.096% higher; to see this index registered at 364.525. The day starts with the U.S. Dollar steady, trading at 1.271 to Sterling, at 1.129 to the Euro and with the US Dollar buying 4.823 Brazilian Real.

The New York market started the day yesterday trading on a modest negative note, while the London market started the day trading on a positive note. Both markets maintained their respective stance into the early afternoon trade. As the afternoon progressed the London market buoyed by buying support started to gain more momentum to close on a positive note for the day's trade. The New York market hit a floor and bounced off the lows of the day to settle on a modest close to par note for the day.

The London market ended the day on a positive note and with 80.95% of the earlier gains of the day intact, while the New York market ended the day unchanged. This positive close to par note might inspire some degree of confidence to possibly set the market for a hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

JUL 1250 + 17                                                                   JUL 98.90 Unch
SEP 1263 + 18                                                                   SEP 100.70 + 0.05
NOV 1278 + 18                                                                 DEC 102.90 – 0.10
JAN 1295 + 19                                                                  MAR 105.15 – 0.15
MAR 1313 + 21                                                                MAY 106.60 – 0.20
MAY 1334 + 24                                                                JUL 108.00 – 0.30
JUL 1356 + 28                                                                  SEP 109.25 – 0.40
SEP 1369 + 27                                                                  DEC 111.00 – 0.40