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

Coffee Market Report

05 Mar 2018

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 short sold position within the market by 8.88% during the week of trade leading up to Tuesday 27th. February; to register a net short sold position of 53,355 Lots on the day. This net short-sold position which is the equivalent of 15,125,906 bags has most likely been once again marginally increased, following the period of mixed but overall more negative trade, which has since followed.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non-Commercial sector of this market increase their net short sold position within this market by 18.85% during the week of trade leading up to Tuesday 27th. February; to register a net short sold position of 17,377 Lots on the day. This net short sold position which is the equivalent of 2,896,167 bags has most likely been marginally decreased, following the period of mixed but overall more positive trade, which has since followed.

These latest reports bring little to the markets for the start of this week, but with the overall net short sold positions and perhaps the extensive net short sold position held within the New York market, perhaps an indication that the markets are trading close to the lower side of the prevailing price trading range. But with little in the way of positive fundamental news coming to the markets, to buoy speculative sentiment and to assist towards any significant recovery.

Albeit that in terms of robusta coffees the present supply is dominated by the sales out of Vietnam, as the combination of declining robusta coffee stocks in Indonesia and price resistance in most other robusta coffee producers, is leaving consumer market robusta coffee supply largely in the hands of Vietnam. While with concerns over the prospects of the new robusta coffee crop that is due to start being harvested in volume next month, is supressing forward selling activity ahead of this new crop.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 42.78 usc/Lb., while this equates to 35.01% 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 1,121 bags on Friday; to register these stocks at 1,894,183 bags. There was meanwhile a larger in number 16,815 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 51,602 bags.

The commodity markets were mixed in trade yesterday on Friday, to see the overall macro commodity index taking a steady track for the day. The Oil, Natural Gas, Cocoa, Copper, Gold and Silver markets had a day of buoyancy and the Soybean market was steady for the day, while the Sugar, Coffee, Cotton, Orange Juice, Wheat and Corn markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.1% lower; to see this index registered at 429.39. The day starts with the U.S. Dollar steady and trading at 1.379 to Sterling, at 1.232 to the Euro and with the dollar buying 3.252 Brazilian Real, while North Sea Oil is showing some degree of buoyancy and is selling at US$ 65.05 per barrel.

The London and New York markets started the day on Friday trading hesitantly close to par, but with the London market soon coming under pressure and followed by a softening within the New York market, to see both markets taking a softer track into the early afternoon trade. As the afternoon progressed both markets remained under pressure and slipped further into negative territory, but while the London market did bounce back partially from the lows, the New York market experienced only a modest recovery by the close.

The London market ended the day on a negative note and with 56.7% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 79.5% of the earlier losses of the day intact. This close does little to inspire, but perhaps with the evidence of the still extensive net short positions within both markets, it shall bring with it some degree of caution and set the markets for another steady start for early trade today against the prices set on Friday, as follows:

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

MAR 1796 – 11                                              MAR 120.35 – 2.10
MAY 1751 – 17                                              MAY 122.20 – 1.75
JUL 1778 – 16                                                JUL 124.40 – 1.60
SEP 1780 – 16                                                SEP 126.60 – 1.50
NOV 1781 – 17                                               DEC 129.90 – 1.40
JAN 1786 – 17                                                MAR 133.35 – 1.30
MAR 1797 – 18                                              MAY 135.30 – 1.20
MAY 1811 – 19                                               JUL 137.10 – 1.10
JUL 1827 – 19                                                SEP 138.70 – 1.00
SEP 1839 – 15                                                DEC 141.25 – 0.95