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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

01 Jul 2015
With the month of June passed the Government trade authorities within Indonesia’s main robusta producing island of Sumatra have reported that the islands robusta coffee exports for the month of June were 66,111 bags or 22.13% higher than the same month last year, at a total of 364,845 bags. This improved performance and following the rising robusta export volumes for the previous five months contributes to the cumulative robusta coffee exports from Sumatra for the first nine months of the present October 2014 to September 2015 coffee year to being 718,559 bags or 31.16% higher than the same period in the previous coffee year, at a total of 3,024,903 bags.

All indications are that this improved performance and following an improved new crop that is still in progress in Sumatra, that the robusta coffee exports from this island shall continue to post improved volumes for the rest of this coffee year. These exports can be expected to be further buoyed by the fact that so far this year the price competition from Vietnam has been significantly dulled, but the price inflating internal market price resistance that prevails within this world’s leading robusta coffee producer.

The National Export Centre in Nicaragua have reported that the countries coffee exports for the month of May were 1,287 bags or 0.49% higher than the same month last year, at a total of 261,866 bags. This relatively steady performance does however follow the improved performances over the preceding months and the countries cumulative coffee exports for the first eight months of present October 2014 to September 2015 coffee year are 208,324 bags or 21.1% higher than the same period in the previous coffee year, at a total of 1,197,708 bags.

The International Coffee Organisation has reported that the global coffee exports for the month of May were 12% lower than the same month last year, at a total of 9.28 million bags. This dip in the May coffee exports contributing to the cumulative global coffee exports for the first eight months of the present October 2014 to September 2015 coffee year being 4.6% lower than the same period in the previous coffee year, at 72.31 million bags.

The dip in cumulative coffee exports for the first eight months of the present coffee year the ICO note is related to a 6.1% dip in robusta coffee exports at a total of 27.34 million bags, along with a 3.6% dip in arabica coffee exports that totalled 44.97 million bags. This indicates a drop in the market share of robusta coffee within the consumer market to a more modest 37.8%, but one might think that this is more related to the strong price resistance that has been shown over the period by Vietnam and to a lesser degree by the other robusta coffee producers, which has reduced the share of robusta coffees within consumer stock levels.

This price resistance in Vietnam continues and the fact that consumer roasters are not rushing to pay up to secure these coffees, would indicate that there is not really any critical tight supply within consumer market robusta coffee inventories, rather a controlled hand to mouth buying policy on the part of many roasters. Thus the question is with the new Vietnam crop due to start in October, when the internal market shall finally bite the bullet and start to liquidate their considerable stocks at prices that are more related to the tenderable values of the London market. One might guess that this shall start to impact by as early as late August, unless some unforeseen influences shall come forth to inflate the international terminal price levels.

The arbitrage between the markets has broadened yesterday to register this at 51.48 usc/Lb., while this equates to a still attractive to roasters 38.88% price discount for the London robusta coffee market. This arbitrage continues to inspire some degree of consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparatively firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,060 bags yesterday; to register these stocks at 2,150,108 bags. There was meanwhile a larger in volume 3,527 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,025 bags.

The commodity markets remained mixed but experienced an overall more positive track yesterday and perhaps to a degree, with the new of increased consumer confidence levels in the U.S.A. assisting to buoy sentiment. The Oil, Sugar, Cotton, Wheat, Corn and Soybean markets had a day of buoyancy and the Natural Gas and New York arabica coffee markets were steady, while the Sugar, London robusta Coffee, Copper, Orange Juice, Gold, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.45% higher to see this Index registered at 433.44. The day starts with the U.S. Dollar steady and selling at 1.570 to Sterling and 1.114 to the Euro, while North Sea Oil is tending softer and is selling at 60.35 per barrel.

The London market opened the day yesterday on a near to steady note, while the New York market started the day with modest buoyancy, to see both markets take this track into the afternoons trade, when both markets settled back to marginally below par. The New York market as the afternoon progressed steadily lost some more weight, while the London market remained marginally below par. The New York market did however soon regain support and experienced a modest rally, while the London market moved into negative territory, but with the rally in New York faltering in late trade. The London market continued to end the day on a soft note and with 50% of the losses of the day intact, while the New York market shed all of its gains of the day and to end the day on par. The failure of the New York market to maintain its gains might perhaps dent confidence and one might expect little better than a steady start for the markets for early trade today against the prices set yesterday, as follows:


JUL 1885 – 7                               JUL   130.65 – 0.15
SEP 1784 – 8                               SEP   132.40 unch
NOV 1791 – 7                             DEC  136.00 unch
JAN 1802 – 6                              MAR 139.60 – 0.05
MAR 1816 – 9                            MAY 141.75 + 0.05
MAY 1833 – 10                           JUL  143.60 + 0.15
JUL 1852 – 10                             SEP   145.25 + 0.25
SEP 1871 – 10                             DEC  147.65 + 0.50
NOV 1890 – 10                           MAR 149.95 + 0.75
JAN 1913 – 10                             MAY 151.35 + 0.90