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

Coffee Market Report

12 Apr 2016
The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market decrease their net long position within the market by 48.53% over the week of trade leading up to Tuesday 5th April; to register a net long position of 12,981 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 4.58%, to register a net long position of 34,201 Lots on the day.  Over the same week the Non Commercial Speculative sector of this market decreased their net long position within the market by 54.06%, to register a net long position of 8,760 Lots on the day.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net short sold position within the market by 15.55% over the week of trade leading up to Tuesday 5th April; to register a net short sold position of 7,501 Lots on the day. This net short sold position that is the equivalent of 1,250,166 bags is most likely to have been decreased, over the period of mixed but overall positive trade, which has since followed.

The Coffee Exporters Association of Brazil has reported that the countries green coffee exports for the month of March were 66,534 bags lower than the same month last year, at a total of 2,748,168 bags. The robusta Conilon exports within these figures were far lower when compared to the same month last year, at 58,168 bags and the balance, an increase of 170,000 bags of natural arabica coffee, when compared to the same month last year. The countries value added soluble coffees for the month and calculated in terms of their green coffee equivalent were 14,023 bags lower than the same month last year, at a total of 299,057 bags. This resulted in the combined coffee exports for the month of March at 130,557 bags lower than the same month last year, at a total of 2,997,225 bags. This report follows on from eleven months of positive coffee exports from Brazil and a cumulative total of around 33 million bags in green bean and soluble coffee equivalent, over the past twelve months.

The July on July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 53.81 Usc/Lb., while this equates to a 42.96% 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 3,090 bags yesterday; to register these stocks at 1,413,774 bags. There was an increase in the number of bags pending grading to the exchange, at 2,565 bags; to register these pending grading stocks at 15,916 bags.

The commodity markets had a mostly positive day yesterday, with the assistance of a softer US Dollar assisting to make these US Dollar based commodities, more affordable in other key currencies. There is continued talk about concerns over the strength of the global economy in general terms however, with traditional safe haven Gold gaining speculative ground. It was a similarly positive day for the Energy markets, Brent and US Crude positive on the day, as was it a firm day for Cocoa, Coffee, Cotton, Copper steady, Soybean, Silver, Platinum and Palladium. It was a softer day for Sugar, Orange Juice, Wheat and Corn markets on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.18% higher to see this Index registered at 383.84. The day starts with a relative steady U.S. Dollar at 1.424 to Sterling and 1.142 to the Euro, while North Sea Oil is steady in early trade and is selling at 41.76 per barrel.

The coffee markets started the day yesterday on a positive track, London maintaining and building on the gains of the previous session. It was a similarly positive start to the day in New York although this market succumbed to early selling pressure and lost the early morning gains to break through into negative territory before underlying buyer activity assisted to prop the floor. The Brazil Real registered some strength against the weakness of the US Dollar yesterday, to remove any likelihood of volume selling activity from this market into New York and assisting to buoy this market. It was a sizeable volume day for both markets yesterday, the afternoon session remained in positive territory where underlying speculative buying support appeared in volume once more toward the latter half of the session in New York, to widen what was otherwise a relatively limited range up to that point. A similar boost toward the end of the day in London, saw both markets finish their respective days in positive territory just off the high and after a buoyant session, to set the close yesterday in positive territory, as follows:

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

MAY 1548 + 35                            MAY 123.35 + 2.90
JUL   1575 + 32                            JUL   125.25 + 2.70
SEP   1590 + 31                            SEP   126.90 + 2.60
NOV 1605 + 30                            DEC  129.15 + 2.65
JAN  1622 + 30                            MAR 131.10 + 2.55
MAR 1636 + 28                           MAY 132.65 + 2.45
MAY 1656 + 28                           JUL   134.00 + 2.30
JUL   1675 + 28                           SEP   135.20 + 2.25
SEP   1695 + 28                           DEC  136.95 + 2.30
DEC 1715 + 28                            MAR 138.65 + 2.30