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

Coffee Market Report

29 Jul 2015
The Indonesian National Mitigation Agency have confirmed that the mild El Nino in the Pacific Ocean is in play and can be expected to carry through in this manner to at least November, but that there is a chance that the El Nino might increase its intensity from thereon. Thus while the El Nino is seen to be not due to cause any severe climatic anomalies for the medium term, it might perhaps cause some delays to the start of the end of the year rain season. This would infer that one has to watch the development of the El Nino over the coming months as a late start to the rain season, does have some impact on the potential for the new coffee crop next year.

The arbitrage between the markets narrowed marginally yesterday, to register at 46.49 usc/Lb., while this equates to a 38.67% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact upon the fortunes of the London market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 10,908 bags yesterday; to register these stocks at 2,106,298 bags. There was no change number of bags pending grading for this exchange; to register these pending grading stocks at 5,450 bags yesterday.

It was a mostly firm day on the commodity markets yesterday, with the U.S. Dollar registering some improvement on the day, while the focus in the markets has turned to the upcoming U.S. Federal Reserve meetings and policy statement that is due out later today. It was a positive day for the Oil markets, Cocoa, Cotton, Copper, Orange Juice Wheat, Soybeans and Corn. It was a similarly steady to mildly positive day for Gold, Silver, Platinum and Palladium and a marginally softer day for Sugar and Coffee on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.75% higher; to see this Index registered at 402.60. The day starts with the U.S. Dollar steady and trading at 1.559 to Sterling and 1.104 to the Euro, while North Sea Oil is steady in early trade and is selling at 53.62 per barrel.

The London and New York markets opened the day yesterday on a steady note and very quickly showing some modest buoyancy, to remain on a positive track into the early afternoon trade. Both markets held above the previous days close for the better part of the session with outright activity in London limited and the close of the prompt month due at the end of this week. There was some degree of external influence in the US Dollar firming to weigh in on the markets and so too a sliding Brazil Real during the day, which touched upon 3.4346 during the day. The appearance of additional origin selling activity into New York pushed this market back toward unchanged and with London closely following, to see the markets finish the day narrowly negative, after a relatively buoyant session although with a degree of volume selling activity toward the latter part of the day, to set the close yesterday as follows:

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

JUL 1761 – 1
SEP 1626 – 1                                SEP   120.25 – 0.15
NOV 1645 + 1                              DEC  123.25 – 0.40
JAN 1663 + 2                               MAR 126.75 – 0.50
MAR 1684 + 2                             MAY 128.95 – 0.45
MAY 1704 Unch                         JUL    131.05 – 0.50
JUL 1720 – 5                               SEP    133.15 – 0.50
SEP 1736 – 11                             DEC  136.10 – 0.50
NOV 1759 – 10                           MAR 139.10 – 0.45
JAN 1780 – 11                             MAY 140.90 – 0.55