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

Coffee Market Report

14 Jan 2016

13th. January, 2016.
The March on March contracts arbitrage between the markets narrowed yesterday, to register this at 48.67 usc/Lb., while this equates to a 42.56% 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 in more volume upon the fortunes of the London market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 8,440 bags yesterday; to register these stocks at 1,702,139 bags. There was an increase of 2,379 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 28,554 bags.

It was another softer day for the commodity markets overall yesterday, as the Chinese stock market slide continued to highlight concerns regarding the apparently slowing economic growth in China, as did another firmer day for the US Dollar contribute toward the negative pressure on the day. It was a softer day for the Oil markets, Sugar, Cocoa, Copper, Cotton and Orange Juice markets, a mixed day on the Coffee markets and a firmer day for Corn, Wheat, Soybean markets. It was similarly a softer day for Gold, Silver, Platinum and Palladium markets. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.52% lower to see this Index registered at 362.47. The day starts with the U.S. Dollar steady in early trade and trading at 1.445 to Sterling and 1.083 to the Euro, while North Sea Oil is steady in early trade and is selling at 30.03 per barrel.

The coffee markets set off to a mildly softer start yesterday. New York registered a mild recovery back into positive territory as the morning session got underway, while London in muted volumes continued on a modest negative track. The midday session in London turned slightly buoyant with underlying roaster fixation support propping the floor, whereas in New York, the day turned to negative and the overall softer sentiment of the overall commodity sector weighed in, to lead to a lower but choppy session in the afternoon, to see both markets hovering around unchanged toward the latter half of the day and a mild recovery back to positive near the end of the day, for both markets. London managed to sustain the positive recovery to the end of the day, but New York turned softer in the final run to the bell, to see a close in London near to the day highs and New York closer to the middle of the day’s narrow trading range. The Brazil Real against the US Dollar is at an improved 4.0262 this morning, while the markets apparent consolidation in relatively narrow ranges yesterday, may inspire a steady start for early trade today, against the prices set yesterday, as follows:

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

JAN     1406 + 3                          MAR  114.35 – 0.10
MAR    1448 + 4                         MAY  116.70 – 0.10
MAY    1477 + 4                         JUL    118.75 – 0.05
JUL      1507 + 5                         SEP    120.65 – 0.05
SEP      1533 + 5                         DEC   123.25 – 0.05
NOV     1556 + 5                        MAR  125.75 – Unch
JAN      1577 + 7                        MAY  127.15 – Unch
MAR    1596 + 7                        JUL    128.40 – 0.05
MAY    1618 + 7                        SEP    129.55 – 0.05
JUL      1643 + 7                        DEC   131.15 – Unch