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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

07 Sep 2018

The Vietnam authorities have estimated that the countries coffee exports for the month of August, were 2.25 million bags. With the more exact figures for the August exports still to come to the fore in a few weeks’ time.

Meanwhile in terms of September coffee exports it is reported on Reuters, that traders are talking in terms of exports that shall be between 1.5 million and 2 million bags. With focus now on the present summer and autumn rain season which is expected to finish in approximately five to six weeks’ time, to trigger the start of the new crop harvest.

The new crop harvest in Brazil is almost complete, with farm and mill stocks no doubt higher than normal and the question now is how good shall the forthcoming spring and summer rain season be for farmers, which shall dictate the size of the forthcoming 2019 crop. Presently the forecasts are for a mostly dry month of September over the main coffee districts, but this is not unusual and it is only in October that the rains start to become a critical factor.

Meanwhile there are reports that the flowerings that came with the unseasonal rains in August have been mostly aborted, which shall already have some impact upon the size of the coming years crop that is already expected to be lower, due to the biennial bearing factor. Thus, one might expect that with some volume of sales in hand, that farmers shall be conservative in their selling activity until they can evaluate the quality of the rains and subsequent flowering towards the next crop, which shall dictate the requirement to hold onto or to liquidate their substantial stocks in hand.

Today is Independence Day in Brazil, which will keep most of the Brazil farmers and exporters off the field of play within the coffee markets. However, while it is likely to reduce Brazil price fixation selling activity within the markets, there shall most probably still be some Good until Cancelled price fixation activity coming to the fore, should there be any buoyancy developing through the day. But with the Brazil Real having firmed against the U.S. dollar overnight, it is unlikely that there shall be any incentive for selling within Brazil.

The November 2018 to December 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 34.52 usc/Lb., while this equates to 33.78% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 5,084 bags yesterday; to register these stocks at 2,241,960 bags. There were meanwhile a larger in number 19,805 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 171,800 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 28,833 bags or 2.37% over the week of trade leading up to Monday 3rd. September, to see these stocks registered at 1,243,167 bags, on the day.

Many of the commodity markets encountered relatively steady U.S. dollar yesterday, but with many markets on the back foot for the day, to see the overall macro commodity index on the backfoot for the day. The Copper, Corn, Soybean and Gold markets ended the day on a positive note, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Orange Juice, Wheat and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.21% lower; to see this index registered at 400.38. The day starts with the U.S. Dollar steady and trading at 1.292 to Sterling, at 1.162 to the Euro and with the dollar buying 4.059 Brazilian Real, while North Sea Oil is steady and is selling at US$ 75.90 per barrel.

The London market started the day with modest buoyancy and the New York market started the day trading around par, to see the markets taking a relatively steady track into the early afternoon trade. As the afternoon progressed, both markets started to come under pressure and moved into negative territory and particularly so for the New York market, which saw sell stops being triggered to accentuate the losses and to set both markets on a softer track for the rest of the day.

The London market ended the day on a negative note and with 56.2% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 91.5% of the earlier losses of the day intact. This close does not paint a pretty picture for the charts, but with the Brazilian Real firmer and the trade in Brazil mostly off the field of play, it might well inspire some degree of cautious confidence and set the markets for a steady to perhaps modestly buoyant start for early trade today. Against the prices set yesterday, as follows:


SEP 1540 – 27                                                SEP 97.95 – 2.15
NOV 1492 – 9                                                DEC 102.20 – 1.60
JAN 1493 – 6                                                 MAR 105.55 – 1.55
MAR 1506 – 4                                                MAY 107.90 – 1.50
MAY 1523 – 5                                                 JUL 110.30 – 1.45
JUL 1540 – 5                                                  SEP 112.65 – 1.45
SEP 1557 – 5                                                  DEC 116.05 – 1.40
NOV 1573 – 5                                                 MAR 119.35 – 1.40
JAN 1586 – 5                                                  MAY 121.30 – 1.35
MAR 1601 – 5                                                 JUL 123.00 – 1.35