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

 

I. & M. Smith (Pty) Ltd.

Coffee Market Report

01 Oct 2015
The National Export Centre of Nicaragua have reported that the countries coffee exports for the month of August were 16,456 bags or 12.15% lower than the same month last year, at a total of 118,973 bags. This more modest performance does however follow the preceding months of overall improved export volumes and the report indicates that the cumulative exports for the first eleven months of the present October 2014 to September 2015 coffee year are 95,985 bags or 5.91% higher than the same period in the previous coffee year at 1.72 million bags.

Tantamount to the prevailing sentiment that the internal market is carrying a substantial quantity of past crop coffee stocks held in Vietnam, the latest estimate to come from the local trade is that there is a potential for exports in October, to reach anywhere between 1,33 to 2,33 million bags in October. Albeit early in the month, traders in Vietnam are reporting that they continue to encounter price resistance from the farmers and internal intermediary traders of past crop robusta coffee stocks. However they are forecasting that should the London market gain in value in the short term, they would anticipate to see a degree of catch up selling to come to the market of these past crop coffee stocks and ahead of the new and potentially larger crop for the October 2015 to September 2016 harvest.

The arbitrage between the markets widened yesterday, to register this at 50.72 USc/Lb., while this equates to 41.80% price discount for the London robusta coffee market. This arbitrage remains 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 7,840 bags yesterday; to register these stocks at 1,990,781 bags. There was an increase by 770 bags in the number of bags pending grading for this exchange; to register these pending grading stocks at 37,535 bags.

It was a mixed day in the commodity markets yesterday, as the U.S.A. Jobs data posted stronger than expected results, stirring up speculation of an interest rate hike to possibly be announced by the Federal Reserve Bank before the end of the year. It was a firmer day for the U.S. Dollar against other major currencies, and a mixed day for the Oil markets. It was a positive day for Sugar, Coffee, Copper, Wheat and Soybean and a softer day for Corn, Cotton, Gold, Silver, Platinum and Palladium. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.02% lower and this Index registered at 388.98. The day starts with the U.S. Dollar trading at 1.513 to Sterling and 1.142 to the Euro, the Brazil Real is trading at 3.948 against the U.S. Dollar, while North Sea Oil is steady in early trade and is selling at 47.82 per barrel.

The London and New York markets started the day yesterday in positive territory, with New York building on the gains of the previous session and both markets continued on a positive track to midsession, although London within a narrowly positive and limited range. It was overall choppy day for New York, which lead into the afternoon bowing to seller pressure and as the US Dollar took a firmer stance, although this market registered a recovery toward the latter half of the session. London slipped lower in contrast with sellers waiting above the market finally coming to the floor to see this market finish the day near to the sessions low, whereas it was a more buoyant day in New York where underlying buyer support propped the floor and with the Brazil Real strengthening against the U.S. Dollar, a positive close in this market and a close yesterday, as follows:

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

NOV 1557 – 19                           DEC 121.35 + 0.50
JAN 1564 – 19                            MAR 124.40 + 0.45
MAR 1578 – 19                          MAY 126.50 + 0.40
MAY 1598 – 17                          JUL 128.30 + 0.35
JUL 1618 – 17                            SEP 129.90 + 0.35
SEP 1636 – 18                            DEC 132.40 + 0.30
NOV 1656 – 16                          MAR 134.75 + 0.20
JAN 1675 – 16                           MAY 136.45 + 0.10
MAR 1693 – 8                           JUL 138.15 + 0.10