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

Coffee Market Report

11 Apr 2016
11th April, 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 54.06% during the week of trade leading up to Tuesday 5th. April; to register a net long position of 8,760 Lots. This net long position which is the equivalent of 2,483,421 bags has most likely been trimmed, following the period of mostly mixed trade, which has since followed.

The July on July contracts arbitrage between the London and New York markets widened yesterday, to register this at 55.59 Usc/Lb., while this equates to a 45.36% 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 393 bags on Friday; to register these stocks at 1,416,864 bags. There was similarly a drawdown in the number of bags pending grading to the exchange, of 5,517 bags; to register these pending grading stocks at 13,351 bags.

The commodity markets were overall positive on Friday, a speculative boost within the influential Oil markets provided positive sentiment, along with a degree of US Dollar weakness particularly against a surging Yen, the former lost some ground on the day. It was a positive day for Oil markets, Sugar, Cocoa, Coffee, Cotton Copper, Wheat, Corn, Soybean, Gold, Silver, Platinum and Palladium, with Orange Juice lower on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.17% higher to see this Index registered at 383.14. The day starts with a relative steady U.S. Dollar at 1.417 to Sterling and 1.138 to the Euro, while North Sea Oil is steady in early trade and is selling at 40.45 per barrel.

The London market started the day in mildly negative territory to register a recovery early in the morning session to pave the way for the positive session in the London Robusta market, which followed. The New York Arabica market opened the day marginally higher but with some early in the day selling pressure to push this market into negative territory for much of the morning. The apparently positive day in commodities generally spilled into the coffee markets later in the day, to assist with some further buoyancy a push to the positive in New York, although once the days’ high was tested sellers returned to cap the gains, to see this market slide back to unchanged toward the latter half of the day. It was a more positive day in London which built upon earlier gains and finished the day near to the high of the day, whereas New York managed another late in the session recovery into positive territory, to set a finish the middle of the trading range. Both markets had a fairly good volume day, certainly there was a hefty 55,838 Lots of trade posted against the two front months in New York, to set the close on Friday in positive territory, as follows:

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

MAY      1513 + 17                     MAY  120.45 + 0.65
JUL        1543 + 15                     JUL    122.55 + 0.60
SEP        1559 + 11                     SEP    124.30 + 0.55
NOV      1575 + 10                     DEC   126.50 + 0.60
JAN        1592 + 10                    MAR  128.55 + 0.45
MAR      1608 + 9                       MAY 130.20 + 0.35
MAY      1628 + 8                       JUL   131.70 + 0.30
JUL        1647 + 4                       SEP   132.95 + 0.40
SEP        1667 + 4                       DEC  134.65 + 0.50
DEC       1687 + 4                       MAR 136.35 + 0.65