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

Coffee Market Report

18 Apr 2019
The New York market plunged to new thirteen and half year lows yesterday, as bearish sentiment over the prospects of the start of the new Brazil crop over and above the prevailing surplus coffee supply seemingly encouraged speculative short selling pressure upon the market. This resulting in the value of the second month of the board falling by 15.3% for the year, from an already soft end to the previous year.

The decline in the market and ahead of an Easter long weekend for the majority of the mainstream consumer markets will most likely inspire the already complacent industry buyers to step back and to hold out for new lows, while many producers continue to show price resistance within their internal markets, to result in continued lacklustre physical market trade.

The London market shall be closed tomorrow and again on Monday, while the New York market shall be closed tomorrow and to trade solo and for a shortened trading day on Monday.

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 25.60 usc/Lb., while this equates to 28.56% 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 640 bags yesterday; to register these stocks at 2,479,336 bags. There was meanwhile no change to the number of bags ending grading for this exchange; to register these pending grading stocks at 7,897 bags.

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking a near to steady track for the day. The Cocoa, Cotton, Copper, Orange Juice, Wheat and Silver markets ended the day on a positive note, while the Oil, Natural Gas, Sugar, Coffee, Corn, Soybean and Gold markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.12% lower; to see this index registered at 406.60. The day starts with the U.S. Dollar steady and trading at 1.305 to Sterling, at 1.130 to the Euro and with the US Dollar buying 3.938 Brazilian Real.

The London and New York markets started the day yesterday trading close to par and with both markets showing some degree of modest buoyancy, but with the markets soon falling back to take a modest negative stance into the early afternoon trade. As the afternoon progressed, the New York market and with a weaker Brazil Real in play, started to come under pressure and to trigger sell stops, which drove the market deeper into negative territory and with the London market following suit, in a more subdued and less aggressive manner. This set the markets on track for somewhat sideways negative trade through to the close, against a relatively high volume of trade for the day.

The London market ended the day on a negative note and with 82.6% of the earlier losses of the day intact, while the New York market ended the day on a very negative note and with 83.5% of the earlier losses of the day intact. This close paints a negative picture for the charts and does not inspire confidence, but one might suspect that following the high volume of trade yesterday, that there might be some degree of exhaustion within an oversold New York market. To most likely set the markets for a cautious steady start for early trade today, against the soft prices set yesterday, as follows:

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

MAY 1386 – 16                                             MAY 87.05 – 3.45
JUL 1412 – 19                                               JUL 89.65 – 3.30
SEP 1431 – 18                                               SEP 92.25 – 3.30
NOV 1452 – 16                                             DEC 96.15 – 3.30
JAN 1471 – 16                                               MAR 99.95 – 3.25
MAR 1492 – 14                                             MAY 102.40 – 3.25
MAY 1513 – 14                                              JUL 104.75 – 3.15
JUL 1533 – 14                                                SEP 107.00 – 3.05
SEP 1552 – 14                                                DEC 110.25 – 3.00
NOV 1566 – 14                                              MAR 113.45 – 2.95