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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

11 Jul 2019

The second World Coffee Producers Forum being held in Campinas in São Paulo State, Brazil got underway yesterday and predictably, the focus was upon the ongoing soft price dictates of the reference prices of the coffee terminal markets, with representatives from the Colombian coffee federation calling for some form of producers association to limit supply and buoy prices. But with no clear formula as to how to achieve and structure such a price support program and many having voiced comment that such attempts in the past had always failed, there is presently no belief in the ability of the coffee producers to counter the negative effects of the speculatively influenced coffee terminal markets.

Meanwhile with many reports coming to the fore from within Brazil that indicate that the past weekends cold weather resulted in only scattered incidences of minimal frost damage towards the next 2020 Brazil crop, the frost factor is tending to lose its influence upon market sentiment in trade yesterday. But with the weakening of the U.S. dollar and its influence upon a firmer Brazil Real coming to fore, to limit the downside potential of coffee markets for the day.

The Australian Government’s Bureau of Meteorology have reported that temperature conditions within the Pacific Ocean remain close to neutral at present, but there nevertheless remains a chance for modest El Niño conditions to be experienced later in the year. But for the present the report does not indicate any threatening weather conditions for the Pacific Rim coffee producing countries and likewise, for coffee producers further afield.

Meanwhile with longer range weather forecasts not foreseeing any threat to the prospects for the next spring and summer rain season in Brazil, there are many who are speculating that Brazil would be due for a biennially bearing larger arabica coffee crop next year. This proving to be a factor that is fuelling some degree of bearish speculative sentiment within the markets, despite the accepted fact that the present harvest that is in progress, shall bring to the fore a smaller Brazil arabica coffee crop.

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 41.04 usc/Lb., while this equates to 38.75% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange with the exchange were seen to decrease by 690 bags yesterday; to register these stocks at 2,369,511 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags.

The commodity markets had a day of buoyancy for most markets, to see the overall macro commodity index taking an upside track for the day. The Oil, Natural Gas, Sugar, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Cocoa and Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.07% higher; to see this index registered at 401.65. The day starts with the U.S. Dollar steady and trading at 1.253 to Sterling, at 1.127 to the Euro and with the US Dollar buying 3.754 Brazilian Real.

The London and New York markets started the day yesterday trading with modest buoyancy, but with both markets drifting back to trade around par for the early afternoon trade. As the afternoon progressed the markets attracted support and moved back up into positive territory, before selling pressure returning for the New York market to take the market into negative territory and followed by the London market, in a more muted manner.

The London market ended the day on a modestly negative note and with 85.7% of the earlier losses of the day intact, while the New York market ended the day on a negative note and with 81.6% of the earlier losses of the day intact. This softer close and with little in the way of supporting fundamental news coming to the close, is unlikely to inspire much in the way of confidence and is likely to set the market for only a near to steady start in early trade today, against the prices set yesterday, as follows:


JUL 1397 – 3                                                JUL 104.35 – 1.55
SEP 1430 – 6                                               SEP 105.90 – 1.55
NOV 1460 – 7                                              DEC 109.70 – 1.60
JAN 1487 – 7                                               MAR 113.40 – 1.50
MAR 1511 – 8                                              MAY 115.70 – 1.50
MAY 1533 – 10                                             JUL 117.75 – 1.35
JUL 1552 – 11                                              SEP 119.70 – 1.25
SEP 1570 – 11                                              DEC 122.55 – 1.15
NOV 1586 – 11                                             MAR 125.40 – 1.10
JAN 1603 – 11                                              MAY 127.30 – 1.00