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

Coffee Market Report

19 Sep 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 a negligible 559 Lots or 1.44% during the week of trade leading up to Tuesday 13th September; to register a net long position of 38,160 Lots on the day. This net long position which is the equivalent of 10,818,190 bags has most likely been marginally decreased, following the period of mixed but overall softer trade which has since followed.

The November to December contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 60.54 usc/Lb., while this equates to a 40.80% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, continues to inspire support for the robusta coffee sector of the industry.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 550 bags on Friday; to register these stocks at 1,271,475 bags. There was meanwhile an increase of 2,010 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 12,883 bags.

It was a mixed day on the commodity markets on Friday, as the recent boost in Crude oil price turned softer on Friday, negative sentiment weighed in on reports of increased exports to come from Iran. The latest round of U.S. Consumer price Index data was positively received by the markets and the U.S. Dollar posted a firmer day. In general terms however, the markets remain tenuous awaiting the outcome of the next round of U.S. Federal Reserve meetings that are due to take place tomorrow and Wednesday to deliberate monetary policy. The ever present undercurrent of speculation regarding any likelihood of an interest rate hike, or hint thereof, avidly scrutinised by the markets. It was a mixed day on Friday and the leading Oil markets tending lower, apart from Gasoline which had a more positive day, while it was a softer day for Cocoa, Cotton, Coffee, Gold, Silver and Platinum markets, the Grains sector posted some gains and a positive day for Wheat, Corn and Soybeans, while Sugar posted a very strong close on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% higher; to see this Index registered at 415.29. The day starts with the U.S. Dollar steady in early trade and trading at 1.303 to Sterling and 1.116 to the Euro, while North Sea Oil is steady in early trade and selling at 45.70 per barrel.

The London and New York markets started the day on Friday on a steady to mildly negative note, but with the New York market picking up some value in the morning session, London had a less convincing morning session and struggled to follow suite and moved into positive territory only briefly before slipping back to unchanged in the afternoon. The external influence of U.S. Dollar strength weighed in on sentiment and seller pressure in a limited volume day pressed this market lower, to see buyers return at the lows and with a degree of resistance on the part of origin selling as the Brazil Real posted a firmer day, this market recovered all of the mornings losses, to return to positive territory heading into the afternoon. The latter day session was a muted affair in both markets and the range became narrow to either side of unchanged as the low volume trading day in both markets drew to a close, lacking any fundamental news to inspire direction on Friday, to see the markets finish hardly changed on the day, as follows:

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

SEP      1923 – 4                         SEP   147.10 – 0.50
NOV    1937 + 1                         DEC  148.40 – 0.40
JAN     1955 Unch                      MAR 151.65 – 0.45
MAR   1965 + 1                          MAY 153.55 – 0.40
MAY   1972 + 2                          JUL   155.35 – 0.35
JUL     1980 + 2                          SEP   156.70 – 0.40
SEP     1986 + 2                          DEC 158.55 – 0.40
NOV   1998 + 2                          MAR 160.30 – 0.35
JAN    2007 + 2                          MAY 161.35 – 0.35
MAR  2014 + 2                          JUL  162.30 – 0.35