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

 

I. & M. Smith (Pty) Ltd.

Coffee Market Report

15 Dec 2015
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 the market by 52.2% over the week of trade leading up to Tuesday 8th. December; to register a net short sold position of 9,355 Lots. Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.78%, to register a net long position of 26,918 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 43.5%, to register a net short position of 14,784 Lots. This net short sold position which is the equivalent of 4,191,198 bags has most likely been increased again, following the overall negative trade that has since followed and likewise, that of the net short sold position of the Managed Money Funds.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net short sold position within the market by 4.14% over the week of trade leading up to Tuesday 8th. December; to register a net short sold position of 22,088 Lots on the day. This net short sold position that is the equivalent of 3,681,333 bags has most likely been marginally increased over the period of mixed but overall more negative trade, which has since followed.

The National Coffee Association of Guatemala have reported that the countries coffee exports for the month of November were 22,592 bags or 25.58% lower than the same month last year, at a total of 65,725 bags. This figure and following a lower performance in October results in the cumulative coffee exports for the first two months of this new October 2015 to September 2016 coffee year to being 41,155 bags or 26.61% lower than the same period in the previous coffee year, at a total of 113,517 bags.

It has to be noted however that it is still relatively early in the new crop in Guatemala and that the more modest export performance so far during this new coffee year, is not a reflection on the potential from the new crop but is more reflective on the prevailing internal market price resistance, relative to the soft reference prices of the New York market that has slowed new crop sales. In this respect the forecasts for the new Guatemala coffee are indicating a 6% to 7% larger new crop, at approximately 3.3 million bags and one would expect that export volumes shall start to catch up with those of the previous coffee year, as this new coffee year progresses.

The March on March contracts arbitrage between the markets narrowed yesterday, to register this at 51.63 usc/Lb., while this equates to a 43.06% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact in more volume upon the fortunes of the London market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,777 bags yesterday; to register these stocks at 1,796,330 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 15,250 bags.

The Certified Robusta coffee stocks held against the London market were seen to remain unchanged as at Friday 11th. December; to see these stocks registered at 3,321,333 bags.

The commodity markets were mixed in trade again yesterday, but with many of the markets remaining on a softer track for the day. The Oil, Cocoa, Wheat, Corn, Soybean and Platinum markets had a day of buoyancy, while the Natural Gas, Sugar, Coffee, Cotton, Copper, Orange Juice, Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.47% lower to see this Index registered at 373.83. The day starts with the U.S. Dollar showing a degree of buoyancy in early trade and trading at 1.517 to Sterling and 1.103 to the Euro, while North Sea Oil is steady in early trade and is selling at 36.80 per barrel.

The London and New York markets had a near to steady start for early trade yesterday, but with both markets starting to lose their way in thin and lacklustre morning trade and to take a negative track into the afternoon, when the New York market came under further pressure to extend its losses. The evidence of the sharp reduction in the net short sold positions of the Managed Money funds and the Speculative sectors of the New York market as at Tuesday last week continued to impact upon sentiment within this market, while there was light but steady producer price fixation selling coming to the London market. Thus both markets continued to have a day of negative and below par trade and with the London market becoming softer as the afternoon progressed, but with some degree of underlying support in play to limit the losses. The London market continued to end the day on a very soft note and with 88.5% of the earlier losses of the day intact, while the New York market ended the day on soft note but with only 39.4% of the earlier losses of the day intact. This soft close does little to inspire, but one might think that the ability of the New York market to limit its losses by the close might assist for a degree of caution and perhaps influence a steady rather than negative start for early trade today against the prices set yesterday, as follows:

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

JAN 1475 – 24                                         DEC    117.25 – 0.85
MAR 1505 – 23                                       MAR   119.90 – 1.30
MAY 1534 – 22                                       MAY   122.10 – 1.20
JUL 1561 – 21                                           JUL    124.15 – 1.15
SEP 1582 – 22                                           SEP    126.05 – 1.15
NOV 1601 – 22                                        DEC    128.80 – 1.00
JAN 1620 – 21                                         MAR   131.40 – 0.90
MAR 1639 – 21                                       MAY   133.20 – 0.90
MAY 1661 – 21                                         JUL   134.85 – 0.85
JUL 1690 – 23                                           SEP   136.35 – 0.85