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

Coffee Market Report

28 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 4.25% during the week of trade leading up to Tuesday 22nd September; to register a net short sold position of 33,328 Lots. This net short sold position which is the equivalent of 9,448,488 bags has most likely remained been reduced slightly, following the period of buoyant trade that had followed in the latter half of last week.

The arbitrage between the markets widened on Friday, to register this at 50.30 USc/Lb., while this equates to a 41% price discount for the London robusta coffee market. This arbitrage remains 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 decrease by 2,650 bags on Friday; to register these stocks at 2,020,955 bags. There was no change on the day to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,489 bags.

After a hesitant start to the day on Friday ahead of the anticipated US Federal Reserve Chair speech, as market participants were looking for any signs of a prospective interest rate in this leading economy, the day progressed in a stronger manner within the commodity markets on Friday. The Oil markets lead the way with steady to buoyant session and a positive close. The US Dollar gained momentum during the later session however, to put pressure on sentiment and weighing in on Gold, Silver and Platinum markets which finished softer on the day. It was an improved day in the Palladium, Sugar, Coffee, Cocoa, Cotton, Wheat, Corn, and Soybean markets, although a lower close for the Copper and Orange Juice on Friday. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.74% higher to see this Index registered at 393.34. The day starts with the U.S. Dollar trading at 1.518 to Sterling and 1.117 to the Euro, the Brazil Real is trading at 3.974, while North Sea Oil is steady in early trade and is selling at 47.08 per barrel.

The London and New York markets started the day on Friday with a degree of buoyancy, with the assistance of a firmer Brazil Real which regained some value against the US Dollar during the course of the day, back through 4.00 to 3.93 and away from the historic lows recorded last week. The markets continued to follow a positive track into the afternoon and trade in both markets with sizable volume of trade activity, continued to build upon their earlier gains, as the afternoon progressed. The New York market met with a continuation of support with a degree of speculative short covering coming to the floor once the America’s opened their business day, to provide a latter day boost toward the end of the session. The Brazil Real slipped back as the US Dollar registered a firmer day to 3.97 to the US Dollar. The London market having maintained the gains posted during the session, met with a degree of selling pressure as this market neared the close, thus while a positive session, this market lost some ground and a finish back toward middle of the trading range on the day. The New York arabica market continued to hold the gains posted during the session although within a narrow range as the session drew to a close in this market and a buoyant finish near to the day highs, to set the close on Friday after a hefty volume day in New York and a moderate volume day in London, on a positive note, as follows:

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

NOV    1596 + 30                      DEC   122.70 + 4.40
JAN      1603 + 36                     MAR  125.90 + 4.40
MAR    1618 + 39                     MAY  127.95 + 4.30
MAY    1638 + 40                     JUL    129.70 + 4.25
JUL      1647 + 40                     SEP     131.25 + 4.10
SEP      1674 + 37                     DEC    133.75 + 3.90
NOV     1693 + 37                    MAR   136.15 + 3.70
JAN      1712 + 37                    MAY   138.00 + 3.70
MAR    1732 + 37                    JUL     139.90 + 3.65