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

Coffee Market Report

18 Mar 2019

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 4.55% over the week of trade leading up to Tuesday 12th. March; to register a new net short sold position of 78,604 Lots. This net short-sold position which is the equivalent of 22,283,886 bags has most likely been little changed to perhaps marginally decreased again, following the period of mixed but overall more positive trade which has since followed.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money sector of this market increase their net short sold position within the market by 3.33% during the week of trade leading up to Tuesday 12th. March; to register a short-sold position of 26,967 Lots on the day. This net short position which is the equivalent of 4,494,500 bags has most likely been little changed to perhaps marginally increased, following the period of mixed but overall softer trade that has since followed.

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks increased by 209,958 bags or 3.47% during the month of February, to register these stocks at 6,264,896 bags at the end of the month. The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 570,000 bags per week, would conservatively have been at least 1.1 million bags.

Suggesting that if one is to consider the additional unreported stocks the end month stocks, this would equate to more than twelve weeks of roasting activity, which most would consider to be a very safe reserve. Especially so ahead of the further deliveries due from large new Mexican and Central American crop, which are coming in over and above the steady deliveries from Colombia, Brazil and Vietnam.

The May to May contracts arbitrage between the London and New York markets broadened on Friday, to register this at 30.44 usc/Lb., while this equates to 31.12% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,758 bags on Friday; to register these stocks at 2,498,186 bags. There was meanwhile, a larger in number 3,025 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 33,220 bags.

The commodity markets were mixed in trade on Friday, but with the overall macro commodity index taking a more positive track for the day. The Sugar and New York arabica Coffee markets experienced a degree of buoyancy for the day, while the Cocoa and London robusta Coffee markets ended the day on a negative note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.71% higher; to see this index registered at 407.28. The day starts with the U.S. Dollar near to steady and trading at 1.329 to Sterling, at 1.133 to the Euro and with the US Dollar buying 3.816 Brazilian Real.

The London market started the day on Friday trading marginally south of par, while the New York market started the day trading around par and to see the markets maintaining this stance, into the early afternoon trade. As the afternoon progressed the London market came under increased selling pressure and headed deeper into negative territory and with the New York market likewise coming under some pressure to move south into negative territory, but in a less dramatic manner. The New York market did however soon bounce off the lows and move back up into modest positive territory and with the London market likewise bouncing off the lows and moving back towards par, but remaining within modest negative territory.

The London market ended the day on a negative note but having recovered 81.5% of the earlier losses of the day, while the New York market ended the day on a positive note and with and with 92.9% of the earlier modest gains of the day intact. This close and with the markets ending the day either side but close to par for the day, does little to indicate direction and one might expect to see only a cautious and hesitant start due for early trade today, against the prices set on Friday, as follows:

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

MAR 1469 – 6                                             MAR 94.60 + 0.65
MAY 1485 – 5                                             MAY 97.80 + 0.65
JUL 1496 – 5                                               JUL 100.45 + 0.65
SEP 1513 – 5                                               SEP 103.15 + 0.70
NOV 1530 – 4                                             DEC 106.95 + 0.65
JAN 1547 – 3                                               MAR 110.70 + 0.60
MAR 1567 – 3                                             MAY 113.10 + 0.60
MAY 1587 – 3                                             JUL 115.30 + 0.55
JUL 1607 – 3                                               SEP 117.40 + 0.50
SEP 1626 – 3                                               DEC 120.50 + 0.45