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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

05 Dec 2016

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net long position within the market by 16.95% during the week of trade leading up to Tuesday 29th. November; to register a net long position of 40,758 Lots on the day. This net long position which is the equivalent of 11,554,712 bags has most likely been further decreased, following the period of mixed but overall more negative trade, which has since followed.

With the month of November past, the National Coffee Institute in Costa Rica have reported that the countries coffee exports for the month were 7,243 bags or 22.94% lower than the same month last year, at a total of 24,333 bags. This dip in November exports does however follow an improved performance for the month of October and has contributed to the cumulative coffee exports for the first two months of this new October 2016 to September 2017 coffee year to be 5,086 bags or 9.82% higher than the same period in the previous coffee year, at a total of 56,896 bags.

The March to March contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 53.13 usc/Lb., while this equates to a 36.44% price discount for the London robusta coffee market. This arbitrage remains an attractive factor for the roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,645 bags on Friday; to register these stocks at 1,259,753 bags. There was meanwhile a larger in number 5,587 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,911 bags.

The commodity markets were mixed but with some markets gaining support from a marginally softer U.S. dollar on Friday, to see the overall commodity index taking a steady track for the day. The Oil, Coffee, Cotton, Wheat, Corn, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Sugar, Cocoa, Copper, Orange Juice and Soybean markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.28% higher; to see this Index registered at 422.47. The day starts with the U.S. dollar tending softer and trading at 1.269 to Sterling and 1.057 to the Euro, while North Sea Oil is tending steady and is selling at 52.25 per barrel.

The London market and New York markets started the day on Friday on a steady note and retaining buoyancy into the afternoon trade and with the London market starting on a steady upside track, which was followed later in the afternoon by a bit of a rally for the New York market and with buy stops being triggered to see this market post unexpected gains of 3.85 usc/Lb., but this was not sustained and while the London market retained most of its support through to the close, the New York market suffered a partial negative correction in late trade. The London market ended the day on a very positive note and with 89.6% of the earlier gains of the day intact, while the New York market ended the day on a hesitantly positive note and with only 23.4% of the earlier gains of the day intact. The faltering nature of the New York market and its inability to hold on to its corrective rally is more than likely going to negative towards market confidence and set the markets for little better than a near to steady start for early trade today against the prices set on Friday, as follows:


JAN 2064 + 74                                                 DEC 141.20 – 0.60
MAR 2043 + 60                                              MAR 145.80 + 0.90
MAY 2049 + 57                                               MAY 148.20 + 1.00
JUL 2055 + 57                                                   JUL 150.35 + 1.00
SEP 2061 + 57                                                   SEP 152.30 + 0.95
NOV 2066 + 59                                                DEC 155.15 + 0.95
JAN 2068 + 60                                                 MAR 157.70 + 0.95
MAR 2078 + 61                                               MAY 159.10 + 0.95
MAY 2094 + 61                                                 JUL 160.25 + 1.00
JUL 2112 + 61                                                   SEP 161.45 + 1.25