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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

28 Aug 2017

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 361.43% during the week of trade leading up to Tuesday 22nd. August; to register a net short sold position of 19,012 Lots on the day. This net short-sold position which is the equivalent of 5,389,818 bags has most likely been little changed to perhaps marginally decreased again, with the relatively sharp short covering upside correction that was experienced on Friday.

The respected commodity finance bank Rabobank are reported to have increased their perspective for global coffee supply for the forthcoming October 2017 to September 2018 coffee year by 0.91%, to forecast a coffee supply of 154.4 million bags for the coming coffee year. While the same report has on the back of higher than expected coffee production and exports for the present October 2016 to September 2017 coffee year, increased their perspective for global coffee supply for the present coffee year 0.84%, to 156.3 million bags.

The report does however contribute some degree of bullish news, in terms of the perspective that global coffee demand has increased by 2.5% this year and therefore in terms of global coffee demand they foresee this to rise to 160.4 million bags for the forthcoming October 2017 to September 2018 coffee year. Therefore, indicating a deficit coffee supply of relatively significant 6.1 million bags for the coming coffee year, which if it proves to be close to the mark, would assist towards some degree of reduction of the consumer market stock levels over the next ten months.

Aside from this Rabobank report there was little else in terms of coffee news coming to the markets on Friday, with the global coffee weather news providing nothing in the way of any short-term threats, while the robusta coffee producers were tending to close up shop, ahead of today’s Summer Bank holiday long weekend, for the London market. This to be followed over the coming weekend, when the 4th. September Labour Day holiday for the U.S.A., shall close this volatile market for long weekend break. While with the close in the United Kingdom today, the New York market shall start trading three and a half hours later today at 1330 hrs. Western European time.

The November to December contracts arbitrage between the London and New York markets broadened on Friday, to register this at 35.60 usc/Lb., while this equates to 27.09% 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 787 bags on Friday; to register these stocks at 1,658,541 bags. There was meanwhile a larger in number 3,978 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 127,259 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 1,000 bags or 0.04% over the week of trade leading up to Monday 21st. August, to see these stock registered at 2,479,333 bags, on the day.

The commodity markets had another mixed day on Friday, with the overall macro commodity index taking something of a sideways track for the day. The Oil, Sugar, Cocoa, Coffee, Orange Juice, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Copper and Wheat markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.04% higher, to see this Index registered at 397.92. The day starts with the U.S. Dollar tending softer and trading at 1.289 to Sterling and at 1.193 to the Euro, while North Sea Oil is steady and is selling at $ 52.05 per barrel.

The London market started the day on Friday on the positive side of par and with the New York market following suit and with both markets maintaining their buoyancy, into the early afternoon trade. As the afternoon progressed both markets started to attract support and with good value being added to start to trigger stop loss buy stops and to accentuate the gains, to take both the London and the New York market through to a positive end to the week. Albeit that the New York market only managed to correct most of the earlier losses of the week, while the London market managed to add some modest value for the week.

The London market ended the day on a very positive note and with 88.2% of the earlier gains of the day intact, while the New York market ended the day on likewise very positive note and with 86.4% of the earlier gains of the day intact. This corrective positive close and with the U.S. dollar having lost a little muscle, might be seen to be supportive for confidence and could well assist towards a follow through steady to buoyant start for the New York market for trade today, against the prices set on Friday, as follows:


SEP 2150 + 39                                                  SEP 130.20 + 3.50
NOV 2112 + 45                                               DEC 131.40 + 3.50
JAN 2075 + 41                                               MAR 134.90 + 3.45
MAR 2059 + 39                                             MAY 137.20 + 3.45
MAY 2061 + 36                                               JUL 139.45 + 3.40
JUL 2078 + 37                                                 SEP 141.75 + 3.45
SEP 2084 + 40                                                DEC 145.05 + 3.40
NOV 2094 + 40                                             MAR 148.25 + 3.35
JAN 2105 + 45                                              MAY 150.30 + 3.35
MAR 2110 + 55                                               JUL 152.20 + 3.25