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

Coffee Market Report

09 Oct 2018
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 11.71% over the week of trade leading up to Tuesday 2nd October; to register a new net short sold position of 93,148 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.90%, to register a net long position of 44,437 Lots on the day.

Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 10.92%; to register a new net short sold position of 97,175 Lots. This net short-sold position which is the equivalent of 27,548,681 bags has most likely been reduced further, following the positive correction for the market and likewise, that of the managed money fund sector of the market.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money sector of this market decrease their net short sold position within this market by 10.20% during the week of trade leading up to Tuesday 2nd October; to register a net short sold position of 31,442 Lots on the day. This net short sold position which is the equivalent of 5,240.333 bags has most likely been reduced further, following the period of positive trade, which has since followed.

The January 2019 to December 2018 contracts arbitrage between the London and New York markets widened, to register this at 34.74 usc/Lb., while this equates to 31.06% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,630 bags yesterday, to register these stocks at 2,410,406 bags. There was a decrease of 3,134 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 58,028 bags.

It was a mixed day on the commodity markets yesterday, uncertainty concerning the longer-term economic impact of US and China tariff restraints coming to the fore, while the US Dollar firmed on the day. The political news out of Brazil meanwhile, after their first round election results appeared to bring renewed confidence to this sector and the Brazil Real posted a two-month high during trade yesterday. It was a softer day on the Oil markets, Gold, Silver and Platinum, Corn, Wheat all finished lower on the day and a flat close for Soybean. The Sugar, Coffee, Cocoa, Cotton, Copper and Orange Juice markets were all positive on the close, along with Palladium. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.59% higher; to see this index registered at 416.25. The day starts with the U.S. Dollar trading at 1.309 to Sterling, at 1.148 to the Euro. The Brazilian Real is trading at 3.7786 to the US Dollar, while North Sea Oil is steady, selling at US$ 84.82 per barrel.

The London robusta market propelled from the starting line yesterday, a positive trading range established in good early morning volume, New York arabica set a similar track on opening, in positive territory and good volume, to be followed by a period of consolidation as the new, higher trading range was absorbed by both markets. The early morning rally in London met with selling at the top and the midmorning session slipped away from the highs, although maintaining positive territory, with another push to higher as the America’s came to the floor at the start of their business day. In the New York, the arabica market encountered similar sentiment and trend, the early morning rally settled into a narrow range in positive territory, met with another push upward by midsession where levels were maintained in good volume. The latter day saw a degree of selling pressure return to both markets, London approached par before posting a recovery toward the end of the day. The downward track in New York was limited and upward momentum reappeared as the day drew to a close. It was overall, a busy and buoyant trading day in both markets, to set the close at the higher end of the trading range, in positive territory, as follows:

London Robusta US$/MT    New York Arabica Usc/Lb.

NOV   1,684 + 29                DEC  111.85 + 2.90
JAN    1,700 + 38                MAR 115.35 + 2.95
MAR  1,713 + 41                 MAY 117.80 + 2.95
MAY  1,727 + 42                 JULY 120.15 + 2.95
JULY  1,742 + 43                SEPT 122.45 + 2.90
SEPT  1,756 + 43                DEC  125.85 + 2.95
NOV   1,770 + 43                MAR 129.10 + 2.60
JAN    1,784 + 43                MAY 131.15 + 2.90
MAR  1,800 + 43                JULY 132.95 + 2.90
MAY  1,812 + 43                SEPT 134.70 + 2.90