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


I. & M. Smith (Pty) Ltd.

Coffee Market Report

18 Jul 2019

The coffee markets remain devoid of fundamental supportive news, but many are keeping an eye upon the incoming colder weather over south east Brazil and the concern over a slight threat of frost. Albeit that most forecasters for the present, do not foresee any reality for damaging frost conditions to occur during the coming weekend.

Meanwhile despite some degree of coffee market price recovery that has come with the recent weeks of speculative short covering buying activity, the prices of the coffee terminal markets remain relatively soft and continue to be a concern for producers. Resulting in continued internal market price resistance for most producers, which is resulting in relatively hard asking price export differentials to the markets, for the majority of coffee producers.

One might speculate that the ability for the markets to resist the downside pressure over the past few days might indicate that with a more even supply and demand structure for the coming October 2019 to September 2020 coffee year and with uncertainty over what the quality of the forthcoming October to April spring and summer rain season in Brazil might be, that it might not be encouraging for the speculative sector of the markets to consider to once again sell the markets heavily short. To perhaps set the markets for some degree of buoyancy, for the last quarter of the year. But it is always difficult, to speculate on what direction the funds might take.

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 42.85 usc/Lb., while this equates to 39.9% 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 249 bags yesterday; to register these stocks at 2,363,965 bags. There was meanwhile a larger in number 20,236 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 32,376 bags.

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Natural Gas, Coffee, Copper, Corn, Gold and Silver markets ended the day on a positive note, while the Oil, Sugar, Cocoa, Cotton, Orange Juice, Wheat and Soybean markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.06% higher; to see this index registered at 398.47. The day starts with the U.S. Dollar near to steady and trading at 1.243 to Sterling, at 1.124 to the Euro and with the US Dollar buying 3.763 Brazilian Real.

The London and New York markets started the day yesterday trading to modestly positive side of par and with both markets taking a positive track, into the early afternoon trade. As the afternoon progressed both markets started to pick up support, to add some value. The markets did though hit something of a nearby ceiling and to attract selling pressure at the highs, to limit the gains of the day.

The London market ended the day on a positive note and with 75.9% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 78.7% of the earlier gains of the day intact. This positive close and with the Brazil Real holding steady, might assist towards some degree of confidence and to assist the markets to remain steady for early trade today, against the prices set yesterday, as follows:


JUL 1391 + 22                                               JUL 105.95 + 1.85
SEP 1423 + 22                                              SEP 107.40 + 1.85
NOV 1452 + 21                                             DEC 111.20 + 1.85
JAN 1478 + 18                                              MAR 114.85 + 1.90
MAR 1502 + 16                                            MAY 117.15 + 1.90
MAY 1525 + 16                                             JUL 119.10 + 1.85
JUL 1547 + 16                                              SEP 121.05 + 1.85
SEP 1570 + 16                                               DEC 123.90 + 1.80
NOV 1587 + 16                                             MAR 126.75 + 1.75
JAN 1603 + 16                                              MAY 128.60 + 1.75