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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

23 Dec 2016

The Uganda Coffee Development Authority UCDA have reported that the countries robusta coffee exports for the month of November were 159,106 bags or 63.92% higher than the same month last year, at a total of 408,027 bags. This contributed to the countries cumulative coffee exports for the first two months of the new October 2016 to September 2017 coffee year to being 145,052 bags or 30.72% higher than the same period in the previous coffee year, at a total of 617,171 bags.

In terms of value and in line with the relatively improved price levels that had prevailed this year, the November coffee exports were $ 25,358,266.00 or 101.24% higher than the same month last year, at a total of $ 50,406,739.00. This contributed to the cumulative value of the Ugandan coffee exports for the first two months of the present October 2016 to September 2017 coffee year to being $ 26,690,686.00 or 55.7% higher than the same period in the previous coffee year, at a total of $ 74,607,009.00.

The traditionally conservative Brazil Crop Supply Agency CONAB and with the new crop long since completed have raised their estimate for the new arabica coffee crop by 5.04% to now estimate the new arabica coffee crop to have been 43,382,000 bags. However, they have decreased their estimate on the new conilon robusta coffee crop by 4.92%, to now estimate this crop to have been only 7,987,000 bags. These new estimates have contributed to CONAB having increased their assessment of the overall Brazil new crop by 3.57%, to estimate the new crop to have been 51,369,000 bags.

In terms of the usually conservative nature of the CONAB crop reports and with many seeing these reports to perhaps being as much as 10% lower than reality, one would see this report to be somewhat bearish to the market and supportive for the earlier US Department of Agriculture assessment of this new crop having been a surplus supply crop of 56.1 million bags. A factor in terms of the timing of this latest news yesterday, which might have contributed to the surprising speculative and fund sell off within the New York arabica coffee market.

Looking to the fore in terms of the all-important 2017 Brazil crop that shall need to be another relatively large crop if the country is to look to start rebuilding their very much depleted coffee stocks and following some good earlier rains over October and November and into this month, the weather conditions are presently dry and hot over most of the coffee districts. However most coffee farms now have reasonable ground moisture retention levels and with the medium-term forecasts indicating new cold fronts and good rains for early in January, there are presently no concerns over the prospects for the next 2017 Brazil coffee crop.

The March to March contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 45.48 usc/Lb., while this equates to a 32.70% price discount for the London robusta coffee market. This narrowing arbitrage is now becoming less of an attractive factor for the roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,865 bags yesterday; to register these stocks at 1,262,632 bags. There was meanwhile a larger in number 10,553 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,412 bags.

The commodity markets had another mixed day yesterday, but with the coffee markets being something of a negative highlight, to see the overall macro commodity index taking a softer track for the day. The Oil, Natural Gas, Cotton, Copper and Wheat markets had a positive day’s trade, while the Sugar, Cocoa, Coffee, Orange Juice, Corn, Soybean, Gold and Silver markets took a softer track for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.64% lower; to see this Index registered at 415.94. The day starts with the U.S. dollar steady and trading at 1.229 to Sterling and 1.045 to the Euro, while North Sea Oil is steady and is selling at $ 53.85 per barrel.

The New York and London markets started the day yesterday on a near to steady note and taking this hesitant track into the early afternoon trade, when the combination of speculative and fund liquidation and producer price fixations hit the New York market and started to trigger sell stops to accentuate the losses, with the London market coming under follow on producer price fixation selling pressure. The result was a rather dramatic day of losses for the market and with many consumer industry players already on holiday and withdrawn from the markets, there was little in the way of industry buying under the markets. The London market ended the day on a soft note and with 77.8% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 94.8% of the earlier losses of the day intact. This close does little to inspire and one might think that ahead of the Monday closure of the New York market and the Monday and Tuesday closure of the London market, that one can expect little better than a cautious near to steady start for early trade today against the prices set yesterday, as follows:


JAN 2076 – 43
MAR 2064 – 49                                             MAR 139.10 – 5.45
MAY 2071 – 49                                             MAY 141.35 – 5.40
JUL 2077 – 47                                                 JUL 143.65 – 5.40
SEP 2081 – 46                                                 SEP 145.55 – 5.40
NOV 2083 – 46                                              DEC 148.45 – 5.40
JAN 2083 – 46                                              MAR 151.15 – 5.40
MAR 2086 – 46                                             MAY 152.80 – 5.40
MAY 2094 – 46                                                JUL 154.40 – 5.40
JUL 2107 – 47                                                  SEP 156.05 – 5.40