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

Coffee Market Report

27 Jun 2019

26th. June, 2019.
The coffee markets set off on a positive track on the opening in both markets yesterday, buoyed by weather forecasters report of a cold front to pass across the southern Brazil coffee belt in the coming fortnight, ahead of the next full moon on 16th July, bringing along with the forecast, speculation of a chance of frost. Albeit that if any, the chance of frost damage would be extremely limited in the overall context of coffee areas and production within the coffee growing areas in Brazil, which have additionally seen coffee plantations move out of higher risk areas. One might anticipate that the prospects of forthcoming cold front forecasts ahead and into the traditionally cool winter month of July to maintain a degree of speculative market support to limit the downside potential of the markets in the near term.

The September to September contracts arbitrage between the London and New York markets widened yesterday, to register this at 41.45 usc/Lb., while this equates to 38.58% 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 405 bags yesterday; to register these stocks at 2,387,415 bags. There was an increase of 3,134 bags to the pending grading stocks for this exchange; to register these pending grading stocks at 4,049 bags yesterday.

It was a mostly positive day in the commodity markets yesterday, uncertainty over the likelihood of an interest rate hike to come from the US Federal Reserve next month, the US Dollar posted a recovery against other major currencies. It was a positive day for the Oil markets, Sugar, Copper, Orange Juice, Corn, Coffee and Gold markets and a softer day for Cocoa, Wheat, Soybean, Silver, Platinum and Palladium. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.469% higher, to see this index registered at 397.56. The day starts with the U.S. Dollar steady and trading at 1.266 to Sterling, at 1.135 to the Euro and with the US Dollar buying 3.846 Brazilian Real.

It was a positive opening for both London and New York yesterday, which in the early morning session held position in New York before losing traction as the America’s opened their business day. The London market, having sprinted from the starting line, settled into a new positive range toward midsession, while New York retraced earlier lost ground to recover and in the latter half of the session, technical buying support along with an overall positive sentiment across the commodities sector contributed toward the upward momentum in the coffee markets, on the day. As the day drew to a close, volume thinned along with the earlier upward momentum, the Brazil Real losing ground to the US Dollar toward the end of the day with selling activity returned and the markets finished the day narrowly off of the day’s high in positive territory, and set the close yesterday, as follows:

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

JUL   1416 + 27                            JUL 106.45 + 4.45
SEP   1455 + 33                            SEP 107.45 + 4.45
NOV 1480 + 31                            DEC 111.05 + 4.55
JAN   1506 + 33                           MAR 114.65 + 4.55
MAR 1529 + 33                            MAY 116.70 + 4.50
MAY 1553 + 33                            JUL 118.55 + 4.50
JUL   1573 + 34                            SEP 120.35 + 4.50
SEP   1591+ 34                             DEC 123.25 + 4.45
NOV 1606 + 33                            MAR 126.15 + 4.45
JAN 1621 + 33                             MAY 128.10 + 4.60

Kind regards,
Natasha