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

Coffee Market Report

25 Mar 2016
The Easter long weekend had kicked in relatively early this week for the Latin American countries and with little in the way of selling activity out of Central America, Colombia and Brazil, while ahead of the new crop harvest, there has been slow and steady forward selling activity out of Peru for the past weeks. Thus the New York market was more speculative and technical in nature for trade yesterday, rather than related to the physical coffee trade. With the coffee markets joining the broad based fund and speculative selling spree yesterday, ahead of the long weekend.

The Ivory Coast have reported that the country’s exports of their well respected in the North African and selected Mediterranean Rim European countries robusta coffees for the first five months of the present October 2015 to September 2016 coffee year, were 109,517 bags or 203.25% higher than the same period in the previous coffee year, at a total of 163,400 bags. It is however early day’s still for their exports during the present coffee year and with few problems for their recently harvested new crop and forecasts for the present coffee year foreseen to be around 1.6 million bags, one would think that volumes shall increase significantly for the remaining seven months of this coffee year.

The May on May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 59.92 usc/Lb., while this equates to a 46.98% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, with the good discount most likely due to remain in place for the foreseeable future, in line with steady robusta shipments out of Vietnam.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,243 bags yesterday; to register these stocks at 1,429,298 bags. There was meanwhile a smaller in volume 1,789 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 37,090 bags.

The commodity markets came under general pressure in yesterday’s pre long weekend trade, with the overall macro commodity index sliding backwords for the day. Many markets are most probably also experiencing a degree of book squaring activity, ahead of next week’s Thursday close of the first quarter of the year. The Wheat, Corn and Soybean markets nevertheless had a day of buoyancy and the Natural Gas market was steady for the day, while the Oil, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.60% lower; to see this Index registered at 386.02. The U.S. Dollar is steady and trading at 1.413 to Sterling and 1.116 to the Euro, while North Sea Oil is steady and is selling at 38.40 per barrel.

The London and New York markets opened the day yesterday with both markets taking a softer track and with losses increasing as they went into the afternoon trade. There was a degree of recovery for both markets as the afternoon progressed but with the negative nature of the macro commodity index in play and the industry activity on the wane ahead of the holidays, the markets the London market remained on a relatively steady sideways softer track, but with the New York market drifting back towards the lows of the day. The London market ended the day on a soft note and with 64.9% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 95.9% of the earlier losses of the day intact. The London market shall be closed on Monday for the Easter Monday holiday, while the New York market shall trade solo for the day, but with many of the main players in terms of the producer and consumer markets still on holiday one can expect a quiet day and with perhaps some corrective buoyancy for the New York market against the prices set yesterday, as follows:

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

MAR 1458 – 22
MAY 1491 – 24                                     MAY 127.55 – 3.55
JUL 1522 – 24                                          JUL 129.50 – 3.50
SEP 1546 – 24                                          SEP 131.25 – 3.40
NOV 1565 – 25                                       DEC 133.05 – 3.30
JAN 1582 – 25                                       MAR 134.80 – 3.20
MAR 1604 – 25                                     MAY 136.10 – 3.10
MAY 1626 – 25                                       JUL 136.90 – 2.95
JUL 1650 – 25                                          SEP 137.50 – 2.80
SEP 1673 – 25                                         DEC 138.65 – 2.80