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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

29 Mar 2019

With the month of March coming to a close and with the shipment statistics already at hand, the Vietnam General Statistics office have estimated that the coffee exports for the month of March shall be approximately 2,666,667 bags. This they say, shall result in the countries coffee exports for the first three months of this year to be 15.3% lower than the same period last year, at a total of 7,950,000 bags.

The General Statistics office of Vietnam have at the same time estimated that the value of the country’s coffee exports for the first three months of this year, shall be 23.8% lower than the same period last year, at a total of 830 million U.S. dollars. One would speculate that this much sharper dip in the value of the Vietnam coffee exports for the first three months of this year is more the reason for the lesser percentage fall in the volume of coffee exports, than being related to coffee supply from the new crop.

The reality being that the soft nature of the reference prices of the terminal markets is resulting in internal market price resistance, which is resulting in the asking prices for the Vietnam robusta coffees being too high for buyers to purchase coffees that could be tendered to the certified stocks of the London terminal market. Along with this year, the competition that is coming from last years sharply higher Brazil conilon robusta coffee crop, which is providing price competition for Vietnam robusta coffees within some markets, with some of these conilon coffees heading towards the certified coffee stocks of the London market.

Meanwhile with some degree of assistance from a weaker Brazil Real this week, there are reports of steady internal market coffee sales for the week. Albeit that despite the assistance of the weaker currency to take the bite out of the low dollar prices that are being dictated by the soft nature of the coffee terminal markets, the internal market prices are still relatively low and troubling for the farmers. This continues to inspirt internal market price resistance, which has been inflating the asking export price differentials, on the part of the country’s exporters.

There are seemingly problems developing for short sold exporters in Colombia, for a combination of problems that come with prices and a delay in the start of the new mitaca crop harvest in the southern coffee districts of the country. The delay in the new mitaca harvest is tightening short term internal market coffee supply and price resistance for available coffees, while with the pronouncements of somehow finding a way to set minimum prices that have been voiced by the Coffee Federation of Colombia, the internal market price is resistance is likely to strengthen.

There are however still good volumes of fine washed arabica coffees available from Central America and with the majority of consumer market roasters having some degree of flexibility in terms of their blends, one would think that some degree of tightness in short term Colombian coffee supply shall not be too stressful in terms of overall washed arabica coffee availability. The Colombian and Central American coffees to soon be supplemented by the new Peru crop, which is due to start impacting during the coming month.

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 28.92 usc/Lb., while this equates to 29.94% 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 590 bags yesterday; to register these stocks at 2,492,889 bags. There was meanwhile, a smaller in number 419 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,636 bags.

The commodity markets and with the U.S. dollar continuing do show degree of muscle, were mixed but with many markets softer in in trade yesterday, to see the overall macro commodity index taking a softer track for the day. The Oil, Cocoa, Copper, Orange Juice, Corn and Soybean markets ended the day on a positive note and the New York arabica Coffee on a steady note, while the Natural Gas, Sugar, London robusta Coffee, Cotton, Wheat, Gold and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.59% lower; to see this index registered at 406.31. The day starts with the U.S. Dollar near to steady and trading at 1.307 to Sterling, at 1.123 to the Euro and with the US Dollar buying 3.901 Brazilian Real.

The London and New York markets started the day yesterday on a softer note and with both markets taking a softer track, into the early afternoon trade. As the afternoon progressed and with some degree of modest recovery for the Brazil Real coming into play, the New York market recovered to move back up into modest positive territory, while the London market bounced back from the lows and close to par, but with both markets settling back towards the close and more aggressively so, on the part of the London market.

The London market ended the day on a negative note and with 68.7% of the earlier losses of the day intact, while the New York market ended the day on a steady note and with 20% of the earlier gains of the day intact. This soft close provides little in the way of direction and will perhaps inspire little better than a slow and hesitant near to steady start for early trade today, against the prices set yesterday, as follows:


MAY 1492 – 12                                           MAY 94.00 + 0.15
JUL 1492 – 11                                             JUL 96.60 + 0.15
SEP 1507 – 7                                               SEP 99.35 + 0.15
NOV 1523 – 6                                             DEC 103.25 + 0.15
JAN 1541 – 5                                               MAR 107.10 + 0.15
MAR 1559 – 5                                             MAY 109.55 + 0.15
MAY 1579 – 4                                             JUL 111.80 + 0.15
JUL 1599 – 2                                               SEP 113.90 + 0.10
SEP 1617 – 2                                               DEC 117.00 + 0.10
NOV 1635 – 2                                             MAR 120.10 + 0.10