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

Coffee Market Report

28 Sep 2016
The new October 2016 to September 2017 Central American fine washed arabica producer bloc coffee crop harvest draws closer with these new crop coffees due to start to come to the consumer markets from Honduras, Guatemala, Costa Rica, El Salvador and Nicaragua in the next few months and as the harvest builds into the new calendar year. The leading producer within this bloc has come forth with a positive forecast for their new coffee crop and the National Coffee Institute in Honduras have increased their estimate that this crop which is ripening on the trees, has the potential to fuel exports and reach a record 7.20 million bags in this new coffee year. The reason for their latest and rather positive increase of 2.08 million bags in export potential on that of exports from Honduras that are anticipated by the Institute to reach 5.12 million bags in the current twelve month October 2015 to September 2016 coffee year, is the recovery and replanting program of more resistant varieties subsequent to the devastation caused by extended wet weather induced, roya or coffee rust infestation three years ago and thus their estimate that the overall recovery in coffee production will see Honduras register record output and exports in the coming year.

The National Office of Cocoa and Coffee of the Cameroon has reported their cumulative coffee shipments for the first eight months of this calendar year at an increased 15% on that of the same period in the previous year, to register a total 231,183 bags at end August 2016 and these exports consisted primarily, close to 92% robusta coffee.

The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 63.20 usc/Lb., while this equates to a 41.12% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, continues to inspire support for the robusta coffee sector of the industry.

The Certified washed Arabica coffee stocks held against the New York exchange remained unchanged yesterday; to register these stocks at 1,265,143 bags. There was meanwhile 925 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,403 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decline by 31,667 bags or 1.35% over the week of trade leading up to Monday 26th. September, to register these stocks at 2,314,000 bags, on the day.

The commodity markets had a mixed day and mildly negative day as the U.S. Dollar received a boost of renewed confidence, while the overall energy sector tended softer on the day, as output discussions by two major OPEC producers failed to reach agreement yesterday. It was a softer day for Oil, Cotton, Copper, Gold, Silver, Platinum, and a steady to firmer day for Sugar, Orange Juice, Soybean, Wheat, Cocoa, Coffee, Corn and Palladium markets. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.64% lower; to see this Index registered at 418.85. The day starts with the U.S. Dollar steady in early trade and trading at 1.30 to Sterling and 1.12 to the Euro, while North Sea Oil is tending lower in early trade and trading at 45.30 per barrel.

The London robusta market opened the day in positive territory, although a steady to mildly softer start to the day for the arabica market in New York. The positive note in London continued as market levels reached a plateau and traded either side of unchanged heading into the afternoon. The New York market took a positive track early in the session but overhead sellers returned to the floor to pressure the market lower toward midsession accompanied by the external influence of a firmer U.S. Dollar. The afternoon session brought about a degree of recovery in both markets as underlying speculative support returned to the floor, to see both markets climb to the highs of the day toward the close after a relatively modest day of trade volume. The London market retained its positive track to the close on the day, but with New York giving back almost all of the late in day gains, toward the close and this market finished the day hardly changed, and set the close yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
SEP    1990 + 20
NOV  1995 + 20                         DEC   153.70 + 0.15
JAN    2015 + 18                        MAR  157.00 + 0.15
MAR  2024 + 17                        MAY  158.85 + 0.10
MAY  2031 + 17                        JUL    160.55 + 0.15
JUL    2037 + 17                        SEP    161.90 + 0.10
SEP    2046 + 17                        DEC   163.70 + 0.10
NOV  2054 + 17                        MAR  165.35 + 0.05
JAN   2064 + 17                        MAY  166.35 + 0.05
MAR 2071 + 17                        JUL    167.35 + 0.05