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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

08 Jul 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 decrease their net short sold position within this market by 7.81% over the week of trade leading up to Tuesday 30th. June; to register a new net short position of 25,413 lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 2.31%, to register a net long position of 45,134 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 8.87%, to register a new net short position of 25,214 Lots which is the equivalent of 7,148,057 bags. This net short position has most likely been decreased, following the period of mixed but overall firmer trade that has since followed.

The mainstream northern hemisphere coffee consumer markets are in their slower summer holiday season, which contributes to somewhat lacklustre physical coffee trade for the present. A scenario that is unlikely to change for the short term as these markets begin to ease restrictions on movement and trade, to gradually recover, rather than register an increase in coffee consumption, over the next couple of months, that is seasonally considered to be a lower coffee consumption time of year for these coffee consumer markets.

The September to September contract arbitrage between the London and New York markets widened yesterday; to register this at 46.27 usc/Lb. This equates to 46.13% 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 38 bags yesterday to register these stocks at 1,652,102 bags, with 92.9% of these certified stocks being held in Europe at a total of 1,535,311 bags and the remaining 7.1% being held in the USA at a total of 116,791 bags. There was meanwhile a smaller in number 1,651 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 22,898 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 36,000 bags over the weeks of trade leading up to Monday 6th. June, to see these stocks registered at 1,921,667 bags, on the day.

It was a neutral day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Coffee and Sugar markets ended the day on a positive note, while the Cocoa market ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.4903% higher; to see this index registered at 372.1586. The day starts with the U.S. Dollar steady, trading at 1.256 to Sterling, at 1.128 to the Euro and with the US Dollar buying 5.379 Brazilian Real.

The New York and London markets started the day yesterday trading close to par on a modest negative note, both markets maintained this soft stance into the early afternoon trade. As the afternoon progressed the New York market started to attract a degree of buying support to see the market move onto a neutral stance for the afternoon session. Late in the afternoon session the New York and London markets attracted a firmer degree of buying support to see both markets trend positive towards the close.

The London market ended the day on a positive note and with 88.88% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 84.16% of the earlier gains of the day intact. This positive close might inspire some degree of confidence as the markets gained momentum late in the afternoon trade and one might think the markets are due 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.

SEP 1191 + 16                                                                        SEP 100.30 + 2.15
NOV 1209 + 15                                                                      DEC 102.90 + 2.00
JAN 1225 + 13                                                                        MAR 105.00 + 1.90
MAR 1243 + 13                                                                      MAY 106.20 + 1.85
MAY 1262 + 12                                                                      JUL 107.45 + 1.85
JUL 1280 + 13                                                                        SEP 108.70 + 1.85
SEP 1291 + 13                                                                        DEC 110.35 + 1.80
NOV 1307 + 13                                                                      MAR 112.00 + 1.80