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

Coffee Market Report

25 May 2020

The latest Commitment of Traders report from the New York arabica market has seen the Non-Commercial Speculative sector cut their net long position within the market by 12.40% over the week of trade leading up to Tuesday 19th May; to register a new net long position of 4,629 Lots which is the equivalent of 1,312,301 bags. This net long position has most likely been slightly decreased, following the period of mixed but overall softer trade that has since followed.

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative Managed Money Sector of this market increase their net short sold position within the market by 1.36% over the week of trade leading up to Tuesday 19th May; to register a short-sold position of 35,039 Lots.  This net short sold position is the equivalent of 5,839,833 bags and has most likely been little changed following the period of mixed but overall sideways trade that has since followed.

Today shall see the USA celebrate their Memorial Day holiday and the UK their Spring Bank Holiday, which provides for a long weekend for these countries and the coffee markets.

The July to July contracts arbitrage between the London and New York markets narrowed on Friday; to register this at 48.86 usc/Lb. This equates to 47.16% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged on Friday; to register these stocks at 1,790,305 bags, with 90.8% of these certified stocks being held in Europe at a total of 1,625,344 bags and the remaining 9.2% being held in the USA at a total of 164,961. There was no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,985 bags.

The commodity markets were softer in trade on Friday, to see the overall macro commodity index taking a sideways track for the day. The Cocoa and London Robusta Coffee market ended the day on a positive note, while the Sugar and New York Arabica Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.2352% lower; to see this index registered at 350.9910. The day starts with the U.S. Dollar steady, trading at 1.217 to Sterling, at 1.087 to the Euro and with the US Dollar buying 5.539 Brazilian Real.

The London and New York markets started the day on Friday trading on a modest negative note, both markets continued on this soft track into the early afternoon trade. As the afternoon progressed the New York market attracted selling pressure to accentuate the losses for the day while the London market corrected to trade on a modest positive note until the close.

The London market ended the day on a positive note and with 78.26% of the earlier gains of the day intact, while the New York market ended the day on a negative note 32.4% of the earlier losses of the day intact. The markets shall now have to wait out the holiday and to see what tomorrow shall bring in the way of direction, but one might suspect that tomorrow shall bring little better than a near to steady start against the prices set on Friday, as follows:

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

JUL    1207 + 18                                                                 JUL    103.60 – 1.15
SEP    1228 + 16                                                                 SEP   105.20 – 1.10
NOV   1247 + 14                                                                DEC   107.35 – 1.05
JAN    1267 + 13                                                                 MAR  109.40 – 0.95
MAR   1287 + 10                                                               MAY  110.50 – 0.85
MAY 1308 + 8                                                       JUL 111.70 – 0.75
JUL    1327 + 3                                                                   SEP    112.85 – 0.70
SEP 1343 + 3                                                         DEC 114.45 – 0.60