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

Coffee Market Report

11 Sep 2015

10th September, 2015.

The arbitrage between the markets narrowed yesterday to register this at 48.34 usc/Lb., while this equates to a 39.92% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, even in relation to the prevailing softer market reference prices.

 

The Certified washed Arabica coffee stocks held against the New York exchange registered an increase of 3,910 bags yesterday; to see these stocks at 2,069,872 bags. The number of bags pending grading to the exchange posted an decrease at 6,669 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 29,474 bags.

The commodity markets had a mixed day yesterday, the US Dollar regained some ground during the day, while the next meeting of the US Federal Bank due to take place next week and with it the interest rate hike discussion returning to the fore, encouraged a degree of investor restraint. It was a softer day for the Oil markets, Gold held steady, while it was a softer day for Silver, Platinum, Palladium, Cotton, Corn, Wheat, Orange Juice and Copper markets, it was a positive day for Cocoa and Sugar, whereas Coffee and Soybean markets were steady on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.73% lower to see this Index registered at 394.78 yesterday. The day starts with the U.S. Dollar at 1.534 to Sterling and 1.121 to the Euro, while North Sea Oil is softer in early trade and is selling at 46.86 per barrel.

The London and New York markets started the day on a buoyant note yesterday, in initially thin volumes assisted by the US Dollar which held on to early gains in the morning session. As the day progressed however and with the US Dollar slipping back against other major currencies, New York arabica lost the early gains, leading to additional selling pressure which turned the market to negative territory as the day progressed. The London market resisted much of this external pressure however, and remained relatively steady at the higher levels attained and in a positive range for much of the session. The Brazil Real remained steady through the day, hovering around 3.81 however toward the latter half of the day, the currency posted a recovery against the US Dollar to 3.766, last seen 4th September. This would have contributed to the trend in the latter half of the day in New York, which as producer seller pressure retreated from the floor, resulted in a more positive track for this market, which recovered all of the losses of the session and finished, although hardly changed, in positive territory on the day. In contrast however, the London market which had managed to sustain a positive track for much of the day, met with some selling pressure later in the session, to shed much of the days’ gains toward the end of the day. Thus with an overall buoyant settlement in New York, and a softer but still in the positive on the close for London robusta market, to set the close yesterday as follows:

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

SEP     1595 + 9                           SEP    117.80 + 0.10
NOV    1604 + 12                        DEC   121.10 + 0.10
JAN     1618 + 11                        MAR  124.55 + 0.10
MAR   1637 + 11                        MAY  126.80 + 0.10
MAY   1658 + 10                        JUL    128.90 + 0.10
JUL      1677 + 9                         SEP     130.75 + Unch
SEP      1697 + 8                         DEC    133.55 + 0.05
NOV    1717 + 7                          MAR  136.20 + 0.15
JAN     1738 + 8                          MAY  137.95 + 0.20
MAR   1760 + 8                          JUL     139.75 + 0.20