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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

21 Sep 2015

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non Commercial Speculative sector of this market increase their net short sold position within the market by 10.27% during the week of trade leading up to Tuesday 15th September; to register a net short sold position of 31,970 Lots. This net short sold position which is the equivalent of 9,063,495 bags has most likely remained near to unchanged, following the period of mixed overall steady trade which has since followed.

The Uganda Coffee Development Authority has reported that the country’s coffee exports for the month of August were 52,264 bags or 19.5% higher than the same month last year, at a total of 320,297 bags. This improved performance does however follow many months of relatively modest export volumes and the countries cumulative coffee exports for the first eleven months of the present October 2014 to September 2015 coffee year are still 120,552 bags or 3.66% lower than the same period in the previous coffee year, at a total of 3,171,354 bags.

In terms of value however the Ugandan coffee exports for the first eleven months of the present October 2014 to September 2015 coffee year are still US$ 14,254,630.00 or 3.88% higher than the same eleven months in the previous coffee year, at a total of US$ 381,476,281.00. This is even more impressive in terms of the U.S. Dollar now earning over 25% more Uganda Shillings than it did at the end of the last coffee year, which means that in terms of domestic currency the country’s coffee farmers are still in receipt of a much improved income in domestic currency for their marginally lower sales volumes during the present coffee year.

The arbitrage between the markets broadened on Friday, to register this at 47.78 usc/Lb., while this equates to a 40.37% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact upon the fortunes of the London market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,065 bags on Friday; to register these stocks at 2,039,352 bags. There was meanwhile a larger in volume 5,595 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 43,219 bags.

It was a mixed and overall softer day for the commodity markets on Friday, as the news of the U.S. Federal Reserve Bank decision to maintain current near zero interest rates in this leading economy, contributed a bearish influence on the day and the U.S. Dollar gained some ground on the day. The Oil markets dipped and so too Sugar, Soybean, Corn, Cotton, Copper, Coffee, Orange Juice, Silver, Platinum and Palladium markets lower on the day. The Wheat, Cocoa and Gold markets posted a finish in positive territory. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.94% lower to see this Index registered at 392.29. The day starts with the U.S. Dollar tending softer and trading at 1.554 to Sterling and 1.13 to the Euro, the Brazil Real is however at 3.94, while North Sea Oil is buoyant in early trade and is selling at 47.59 per barrel.

The London market started the day on Friday tending softer, while the New York market opened the day on a positive track in turn bolstering the mood in London. It was a positive morning for both markets which albeit in modest volume of trade maintained these gains into midsession. There was a degree of pressure in midsession as sellers returned to cap the gains met with further pressure and brought both markets back to negative territory, as the day progressed. The latter day session and the advent of a stronger U.S. Dollar weighed in on these markets to see London continue on a negative track and finish the day at the lows. The New York market managed to recover a portion of the ground lost with support of underlying buyer activity returning at the lows of the day, to set the floor and this market recovered its losses to turn to positive, for the latter part of the day, only to slip back toward unchanged as the closing bell approached. Thus, a mixed day of trade within the coffee markets on Friday, which lacked physical fundamentals to guide the markets on the day, steered by the overall uncertainty in macroeconomic sentiment within the markets, after a moderate volume trading day, registered a softer close in both New York and London in negative territory, as follows:


SEP     1556 – 8                           SEP   113.35 – 0.15
NOV    1556 – 8                          DEC  118.35 – 0.20
JAN     1569 – 9                          MAR 121.80 – 0.15
MAR   1585 – 8                          MAY 124.05 – 0.15
MAY   1605 – 9                          JUL   125.95 – 0.15
JUL     1626 – 8                          SEP    127.80 – 0.15
SEP     1648 – 5                          DEC   130.50 – 0.25
NOV   1668 – 5                          MAR  133.10 – 0.35
JAN    1688 – 5                          MAY 134.90 – 0.35
MAR   1710 – 5                         JUL    136.65 – 0.35