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

Coffee Market Report

11 Feb 2019

The delayed 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 4.16% over the week of trade leading up to Tuesday 8th. January; to register a new net short sold position of 62,435 Lots. This net short-sold position which is the equivalent of 17,700,046 bags has most likely been little changed to perhaps marginally increased, following the mixed but overall softer trade which has since followed.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money sector of this market decrease their net short sold position within the market by 17.02% during the week of trade leading up to Tuesday 5th. February; to register a short-sold position of 22,244 Lots on the day. This net short position which is the equivalent of 3,707,333 bags has most likely been little changed to perhaps marginally increased, following the period of mixed but overall more negative trade that has since followed.

The rainfall reports from Brazil have confirmed fair to good rains for most of the main coffee districts in the country over the past week, with further rains to come and this is assisting to rebuild ground water retention levels, following a below average rainfall for many districts, in January. While in terms of internal market coffee trade for the country, last week has been reported to be a slow and lacklustre week and with little in terms of either selling or buying aggression.

The Vietnamese have returned today from their week-long Tet New Year celebrations last week, which brought in the new Year of the Pig on Tuesday 5th. February. This with the possibility of some catch up price fixation selling activity, it likely to bring some more activity to the London market in the coming days, once the countries traders have settled back into their daily commercial routine.

The May to May contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 35.29 usc/Lb., while this equates to 33.42% 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 1,400 bags on Friday; to register these stocks at 2,479,633 bags. There was meanwhile a larger in number 3,879 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 52,254 bags.

The commodity markets were mixed in trade on Friday, to see the overall macro commodity index taking something of a sideways track for the day. The Brent Oil, Natural Gas, Orange Juice, Wheat, Soybean, Gold and Silver markets ended the day on a positive note and the U.S. Oil ended the day on a steady note, while the Sugar, Cocoa, Coffee, Cotton, Copper and Corn markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.001% higher; to see this index registered at 398.68. The day starts with the U.S. Dollar steady and trading at 1.293 to Sterling, at 1.133 to the Euro and with the US Dollar buying 3.731 Brazilian Real.

The London market started the day on Friday trading with some modest buoyancy, while the New York market was trading mostly close to par, but with the London market soon moving south and to see both markets trading close to par for the early afternoon trade. As the afternoon progressed both markets came under pressure and moved down into negative territory and with the markets continuing on a steady downside track, towards a soft close for the day.

The London market ended the day on a negative note and with 94.1% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 82.9% of the earlier loses of the day intact. This close is likely to impact upon confidence, but with the markets having had the ability to remain within the prevailing trading range so far this year, there might be some degree of caution. To make one think that there shall be something of a near to steady start due for early trade today, against the prices set on Friday, as follows:

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

MAR 1530 – 17                                            MAR 102.60 – 1.70
MAY 1550 – 16                                            MAY 105.60 – 1.70
JUL 1566 – 16                                              JUL 108.30 – 1.55
SEP 1583 – 17                                              SEP 110.95 – 1.60
NOV 1601 – 16                                            DEC 114.75 – 1.55
JAN 1618 – 16                                              MAR 118.50 – 1.55
MAR 1637 – 17                                            MAY 120.90 – 1.55
MAY 1656 – 17                                            JUL 123.05 – 1.50
JUL 1672 – 17                                              SEP 125.10 – 1.45
SEP 1689 – 18                                              DEC 128.10 – 1.40