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

Coffee Market Report

19 Apr 2016

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 long position within the market by 45.02% over the week of trade leading up to Tuesday 12th April; to register a net long position of 7,137 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by a nominal 263 Lots, to register a net long position of 34,464 Lots on the day. Over the same week the Non Commercial Speculative sector of this market trimmed their net long position within the market by 72.87%, to register a net long position of 2,376 Lots on the day.

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 30.83% over the week of trade leading up to Tuesday 12th April; to register a net short sold position of 5,188 Lots on the day. This net short sold position that is the equivalent of 864,666 bags is most likely to have decreased, over the period of mixed trade, which has since followed.

The July on July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 53.81 Usc/Lb., while this equates to a 42.96% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, with the good discount most likely due to remain in place for the foreseeable future, in line with steady robusta shipments out of Vietnam.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 640 bags yesterday; to register these stocks at 1,407,667 bags. The number of bags pending grading to the exchange registered an increase of 1,600 bags, to see these pending grading stocks at 7,961 bags on the day.

The commodity markets had a mostly positive day yesterday, the lack of agreement from the weekend meeting of oil producers brought about a less speculatively volatile day for Oil markets, this while the US Dollar gradually lost ground against other major currencies on the day. It was a steady day for the Oil markets and a positive day for Sugar, Cocoa, Coffee, Cotton, Copper, Wheat, Corn and a steady day in Soybean and Orange Juice markets. The day was a little softer for precious metals however, with Gold, Silver, Platinum and Palladium markets posting a lower close on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.646% higher to see this Index registered at 391.31. The day starts with a softer U.S. Dollar at 1.43 to Sterling and 1.132 to the Euro, while North Sea Oil is firmer in early trade and is selling at 41.53 per barrel.

The London robusta market opened the day on a softer note but with the New York market starting the day in mildly positive territory assisted to buoy the morning session in London where volume remained relatively muted in the morning session. The New York market first notice day approaches for the prompt month on 21st April, putting a degree of pressure on the day, however as the afternoon progressed, the New York market started to attract support and move into positive territory, influenced to a degree by the weaker US Dollar on the day, in addition to the overall positive day within the commodities sector in general terms. The New York market continued to build upon afternoon gains as the day progressed, although evidence of producer seller activity returned to the cap the days’ high. In addition, the political upheaval in Brazil is being monitored by the markets and as a main producing country within the commodity sector, the volatile moves of the Brazil Real, which yesterday lost ground against the US Dollar that started the day at 3.528 to 3.588 with the prospect of further devaluation potentially limiting the upside of these markets, while the Conilon Robusta harvest is currently underway and the new natural arabica coffee crop due to begin harvest within the next two months. The markets settled back toward the latter half of the day after a moderate volume trading day, to see both markets finish the day close to the middle of the days range, and in positive territory, as follows:

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

MAY   1530 + 5                           MAY 124.00 + 1.05
JUL     1555 + 3                           JUL   125.95 + 1.10
SEP     1575 + 3                           SEP   127.65 + 1.05
NOV   1594 + 4                           DEC   129.85 + 1.05
JAN    1612 + 7                           MAR  131.90 + 1.05
MAR   1624 + 8                          MAY  133.40 + 1.00
MAY   1641 + 6                          JUL    134.75 + 1.00
JUL     1659 + 5                          SEP    135.90 + 1.00
SEP     1677 + 3                          DEC   137.55 + 1.15
DEC    1697 + 3                          MAR  139.00 + 1.10