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

Coffee Market Report

26 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 increase their net long position within the market by 43.08% over the week of trade leading up to Tuesday 19th April; to register a net long position of 10,212 Lots. Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by a nominal 857 Lots, to register a net long position of 33,607 Lots on the day. Over the same week the Non Commercial Speculative sector of this market extended the net long position within the market by 131.27% to register a net long position of 5,495 Lots on the day.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net short sold position within the market by a nominal 109 Lots over the week of trade leading up to Tuesday 19th April; to register a net short sold position of 5,297 Lots on the day. This net short sold position that is the equivalent of 882,833 bags is most likely to have increased, over the period of mixed but buoyant trade, which has since followed.

The Uganda Coffee Development Authority has reported that the countries coffee exports for the month of March were 63,909 bags or 20.50% lower than the same month last year, at a total of 247,838 bags. This small dip in export volumes does however follow some positive export months and the countries cumulative coffee exports for the first six months of the present October 2015 to September 2016 coffee year, at a steady total of 1,668,720 bags.

The July on July contracts arbitrage between the London and New York markets broadened slightly yesterday, to register this at 52.29 Usc/Lb., equating to a 42.32% price discount for the London robusta coffee market. This arbitrage remains 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 205 bags yesterday; to register these stocks at 1,397,705 bags. The number of bags pending grading to the exchange remained unchanged on the day, to see these pending grading stocks at 2,339 bags on the day.

It was a mixed day on the commodity markets yesterday as oil prices fell along with the US Dollar as fresh economic data from the USA new home sales markets were negatively received by the markets. The keenly watched U.S. Federal Reserve Bank will announce a rate decision on Wednesday and this would appear to have market participants maintain a cautious stance. It was a steady start but finally a softer finish in the oil markets, for Oil, Sugar, Orange Juice, Corn, Wheat, Soybean, Cotton markets had a positive day, as did Gold, Silver, Platinum and Palladium. It was a steady day in the Cocoa and Coffee markets and a lower day for Copper. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.2340% higher to see this Index registered at 398.445. The day starts with a steady U.S. Dollar at 1.454 to Sterling and 1.4542 to the Euro, while North Sea Oil is softer in early trade and is selling at 42.41 per barrel.

The coffee markets started the day on modestly positive track, which in London was sustained through to the end of the session, this market remained in positive territory during the day, building upon gains and setting the close at the high of the day trade after a fair session in volume terms and in a narrow range. The New York market had a rather choppy start that continued throughout the session to see this market bounce around an unusually tight range of less than 0.09% from low to high on the prompt month during the day, with limited fresh fundamental news coming to the coffee markets presently to guide speculative direction, Brazils new arabica harvest a month away and little fresh news to come from the developments within political circles and the presidential impeachment process, the Brazil Real had an extraordinarily steady trading day against the US Dollar. The New York market moved into the afternoon in positive territory and managed to maintain this stance to the end of the day, to see a close in both markets finish the day in positive territory, near to the days’ highs attained, to set the close yesterday as follows:

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

MAY  1535 + 11                          MAY 123.10 + 0.35
JUL    1571 + 14                          JUL   123.55 + 0.20
SEP    1591 + 14                          SEP   125.30 + 0.25
NOV  1612 + 16                          DEC  127.50 + 0.20
JAN   1630 + 15                          MAR 129.80 + 0.30
MAR 1642 + 13                          MAY 131.25 + 0.25
MAY 1661 + 15                          JUL   132.60 + 0.30
JUL   1679 + 15                          SEP   133.80 + 0.30
SEP   1697 + 15                          DEC  135.60 + 0.35
NOV 1717 + 15                          MAR 137.15 + 0.50