Weekly Report 16 - 20 November 2009
Futures Markets:
Arabica : coffee futures continued to decline on spec selling. Activity was light and driven mainly by small specs. External factors remained heavy weight on the prices. During the week, coffee futures gained 1.55 cents to close at 135.75, but substantially off the highs of 142.75 cents. Failure to sustain the move above the key 140 level prompted heavy liquidation. Fundamentally, the coffee market was helped by reports indicating that Colombia crop’s will take longer to recover. In Brazil Safras and Mercado anticipated that the 2010-11 coffee crop will be smaller due to the rains.
Robusta : In London the Robusta market ended higher on modest volume. Roaster buying supported prices and encountered little origin selling today. Spec short covering added support. During the week, Robusta prices rose by $38.00 / metric tonne.
Currency : Sterling touched a two-month high against the euro on Tuesday after Bank of England policymaker Andrew Sentance said the economy was moving towards recovery. The UK currency hovered near its highest against the dollar in more than three months as traders speculated that data due later in the day may show that British inflation accelerated more than expected in October.Later in the week the Pound fell as the U.S. dollar rose while European and US stock markets fell on investors’ concerns about the global economy.
Futures and Currency close levels:
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Monday
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Tuesday
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Wednesday
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Thursday
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Friday
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NY Dec-09 c/lb
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136.35 (+5.25)
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135.75
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138.05
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135.05
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135.75
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Lon Jan-09 $/t
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1339 (+33)
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1328
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1354
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1327
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1344
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£/$
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1.6835
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1.6799
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1.6689
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1.6618
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1.6594
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Physical Markets:
Brazil :According to Safras & Mercados Brazil’s coffee production in 2010/11 may rise less than expected due to excessive rains and increasing production costs. Market players are now seeking to know how rains will damage productivity next year. In other news, USDA Foreign Agricultural Service keeps its estimate for 2009/10 at 43.5 million bags. Coffee exports for the year 2009/10 are estimated at 27 million bags (down 14% on year). Carry-over stocks are forecast at 2.49 million bags, down 2.15 million bags from the previous season.
Export prices for Brazilian fine coffees have been rising, according to exporters and traders, as short supply due to poor weather during harvesting and government purchases make quality beans harder to find. Roasters can usually obtain Brazilian coffees at a substantial discount to the New York futures market price, but rates are now hovering around, or even slightly above, that level, depending on the quality.
In Brazil, the recent strengthening by the Real came to an abrupt halt, closing slightly lower after the Central Bank bought US Dollars.
Colombia :Colombia crop’s recovery will be slower that anticipated. According with some sources, the 2009-2010 crop may be reaching only 9.0 Million bags. Premiums this week gained 5-6 cents, according with local dealers.
Honduras : Exporters not making aggressive offers – just waiting for coffee flow to increase. Weather has been wet hindering picking but improved conditions now may increase flow of beans for export.
Guatemala : Differentials firming as a result of scarcity in Colombia.
El Salvador : El Salvador revised down slightly its estimate for the 2009/10 coffee crop on Wednesday after heavy rains triggered by Hurricane Ida destroyed 8,300 60-kg bags of coffee in landslides and fallen cherries. The harvest, which began in October, will now reach 1.465 million 60-kg bags, according to Procafe, the association of producers.
Ethiopia : Fresh coffee arriving and available but at stratospheric prices as the ECX (Ethiopian Commodity Exchange) goes its own way. Plantation prices are at highest levels for 10 years. It seems the inclusion of coffee in the ECX was for the government to monopolise coffee exports. The ECX has simply not thought about traceability or speciality coffee sales until pressurised by international buyers (SCAA) earlier this year.
Tanzania : Auction prices remain firm and larger quantity on offer at next auction.
Kenya : In the auction this week we saw improved quality from the Nyeri Societies and the flavours from estates are improving. Prices remain very firm due to pressure from exporters who went short and are now scrambling for cover.
Burundi : Infrastructure damaged by heavy rains, very limited quantities on offer until early 2010 as what can has been exported.
Uganda : Both Robusta and Arabica prices remain firm, hence limited business.
India : In its semi annual report, the USDA Foreign Agricultural Service keeps its estimate for India’s 2009/10 coffee crop at 295,000 tons (4.9 million 60 kg-bags), unchanged from the May forecast. 2008/09 coffee exports are estimated to have declined to 180,000 tons from 220,000 tons in 2007/08 because of reduced supplies and higher domestic prices vis-à-vis global prices. Exports are forecast to rebound to 210,000 tons in 2009/10
Papua New Guinea : Weather in the highlands is unusually dry for this time of the season but coffee supplies to Port remain thin.
Indonesia : Nestle and the Indonesian Coffee & Cocoa Research Institute (ICCRI) have launched a new partnership to produce a Robusta coffee plant with better yield and more resistance to drought and disease. The cooperation agreement between Nestle Research & Development in Tours, France, and the ICCRI, based in East Java, is to develop high quality Indonesian Robusta Coffee plantlets. Tours is Nestle’s centre of excellence for innovation in strategically important plant raw materials, in particular coffee, cocoa and chicory. Its focus is on increasing quality and the sustainability of supply. The cooperation started in 1994 but this latest agreement expects to improve yield and drought/disease resistance whilst preserving the originality of Indonesian coffee. Nestle said in a statement that R&D Tours and ICCRI will undertake the genetic mapping of Indonesian Robusta Coffee to ensure the quality of coffee plants that have been developed from the earlier cooperation. Nestlé R&D Tours had already granted the SE (Somatic Embryogenesis) technology to ICCRI to propagate coffee and cacao plantlets in large quantity in a shorter period of time. These have been planted across ten provinces in Indonesia to revitalise cocoa plantations, which Nestle claims helps the competitiveness of Indonesian farmers on the International markets.
Vietnam : Coffee sales in Vietnam slowed in the past week as farmers held back fresh beans from the ongoing harvest to put pressure on domestic prices, dealers said on Tuesday. Quotations for Robusta beans in Buon Ma Thuot, the capital of top coffee-growing province of Daklak, extended last week's losses to 23,500 dong ($1.32) per kg, down nearly 1,000 dong per kg from last Tuesday and 2,000 dong from two weeks ago.
UK : Coffee Republic has appointed Conran & Partners to revamp the image of its high-street coffee bar chain. The decision to invest in the revitalisation of the Coffee Republic brand was taken when research showed that women were less likely to be attracted by the dark colours of current interiors. The move is part of the company turnaround strategy spearheaded by Chief Executive Tariq Affara, which includes plans for a further twenty units across the UK in the next twelve months. The new look will be rolled in the chain's flagship site in London, before being rolled out across the UK and internationally.
London : AMT Coffee will be celebrating next week the 5th Anniversary of their conversion to selling 100% Fairtrade coffee throughout their shops. This celebration will take place at every unit nationally and will include a product offer to thank customers for their support over the last 5 years.
UTZ CERTIFIED announced that Switzerland’s largest retailer and market leader Migros will switch its assortment of coffee to sustainably produced UTZ CERTIFED coffees by the end of 2010. The partnership between Migros and UTZ CERTIFIED started in September 2007 when the Espresso blend became UTZ CERTIFIED. In 2009 Migros was named as ‘the most sustainable retail chain in the world’ by the World Retail Congress.
The Independent: A UK broadsheet newspaper published its guide to the nation’s 50 best food and drink shops – the only coffee retailers named was J. Atkinson & Co of Lancaster. Congratulations from all at DRW!