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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

01 Mar 2018

The Indonesian government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of February were 171,327 bags or 71.77% lower than the same month last year, at a total of 67,368 bags. This number and following a similarly modest export performance for the previous months has contributed to the cumulative coffee exports for the first five months of the present October 2017 to September 2018 coffee year to be 1,401,973 bags or 67.61% lower than the same period in the previous coffee year, at a total of 671,716 bags.

There is however a new Sumatra robusta coffee crop harvest due to start during this month but to only really start coming to the fore in volume by May and a crop that shall assist to buoy export volumes for the rest of the year, but with many forecasts indicating that the new crop shall be somewhat modest in volume, it is unlikely that Indonesian robusta coffee exports shall be a significant feature in terms of global robusta coffee supply this year.

While with the expectations of 3 million bags to 3.5 million bags increase in Vietnam robusta coffees due to come to the consumer markets this year and with the probability for an approximate 3 million to 4 million bags increase of Brazil conilon robusta coffees due to come to the consumer markets later this year, the dip in Indonesian robusta coffee supply is presently of no concern to consumer market players.

The International Coffee Organisation ICO have reported that the global coffee exports for the month of January were 20.7% higher than the same month in the previous year, at a total of 11.01 million bags. This they say has contributed to the cumulative exports for the first four months of the present October 2017 to September 2018 coffee year to be 3.1% higher than the same period in the previous coffee year, at a total of 40.74 million bags.

This news from the ICO does little to inspire confidence within the speculative sectors of the terminal markets, who remain focused upon the forecast for a significantly larger and surplus supply new crop from Brazil this year. A crop that shall see the new conilon robusta coffees starting to impact by May and the new arabica coffees by August this year, on top of what is already good market supply from the larger new Mexican and Central American arabica coffee crop and the larger new robusta coffee crop from Vietnam.

The latter Vietnam factor clearly illustrated by the report that the Vietnam state statistical officials have estimated that the countries exports of mostly robusta coffees over January and February this year, shall be approximately 17.6% higher than the same period last year, at approximately 5.6 million bags.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 43.80 usc/Lb., while this equates to 35.9% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 900 bags yesterday; to register these stocks at 1,895,739 bags. There was meanwhile larger in number 7,060 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,350 bags.

The commodity markets were mixed in trade yesterday and with the U.S. dollar retaining some degree of muscle, to see the overall macro commodity index taking a steady to softer track through the day. The Sugar, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy and the Natural Gas market was steady, while the Oil, Cocoa, London robusta Coffee, Copper and Orange Juice markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.16% higher; to see this index registered at 428.39. The day starts with the U.S. Dollar steady and trading at 1.376 to Sterling, at 1.219 to the Euro and with the dollar buying 3.246 Brazilian Real, while North Sea Oil is steady and is selling at US$ 65.95 per barrel.

The London market started the day yesterday on a softer note and with the New York market starting the day trading around par and with the markets maintaining this stance, into the early afternoon trade. As the day progressed the London market remained on a softer track and the New York market briefly slipped to the south of par, but to soon recover and show some degree of buoyancy. The New York market shrugged off a further bout of selling pressure and to take a positive track into late trade, while the London market remained within negative territory.

The London market ended the day on a negative note but having recovered 54.2% of the earlier losses of the day by the close, while the New York market ended the day on a positive note and with 69.2% of the earlier gains of the day intact. This mixed close but with the London market having bounced back quite well from its lows of the day is likely to inspire some degree of confidence and lead to a steady start for early trade today, against the prices set yesterday, as follows:


MAR 1770 – 14                                              MAR 121.05 + 1.10
MAY 1724 – 11                                              MAY 122.00 + 0.90
JUL 1754 – 11                                                 JUL 124.10 + 0.80
SEP 1756 – 13                                                 SEP 126.20 + 0.65
NOV 1759 – 13                                               DEC 129.50 + 0.55
JAN 1765 – 12                                                MAR 132.80 + 0.45
MAR 1777 – 11                                               MAY 134.75 + 0.40
MAY 1791 – 13                                              JUL 136.50 + 0.35
JUL 1810 – 13                                                SEP 138.15 + 0.40
SEP 1814 – 13                                                DEC 140.65 + 0.35