Futures Markets:

Arabica : coffee futures lost ground on Wednesday pressured by a rallying US Dollar index and a general selloff of all commodities markets. Speculative investment funds were moved to liquidate positions across the entire commodity sector following news from China regarding their intention to stop or greatly reduce Bank of China’s Yuan denominated loans, spurring concerns that such a move could further slow the global economic recovery and overall demand for raw materials.  In Fundamental news, differentials across origin countries continue to strengthen. Coffee futures settled higher on Friday after suffering losses early on the session and breaking recent lows amid speculative liquidation and external market weakness.  Weakness in other commodities complex as well as uncertainty as to new potential regulations in regards to banks ability to invest in riskier instruments led an early speculative liquidation.  Coffee futures touched three week lows, but lack of follow through selling quickly led to short covering and new long positions.

Robusta : Prices continue to follow the lead set in New York.

Currency : Sterling hit a four-month high against the euro and gilt futures tumbled on Tuesday after a higher-than-forecast reading of UK consumer prices stoked some speculation that interest rates may rise faster than expected. Sterling jumped broadly after the figures, pushing the euro as low as 87.37 pence, its weakest since mid-September. Before the data, it traded around 87.64 pence. Against the dollar, the pound rose to $1.6459, a level last seen in early December.

Futures and Currency close levels:

Physical Markets:

Colombia output is set to recover to more than 11 million sacks this year, after registering the lowest production in 33 years in 2009, the coffee growers' federation said on Thursday. Output fell by 31.6 percent last year versus 2008 due to bad weather and a crop renovation program that took some fields out of production. Output amounted to 7.8 million sacks in 2009, down from 11.4 million in 2008.

Mexico : The coffee harvest will likely fall by between 10 and 14% from the 4.6 million 60-kg bags produced in the previous cycle due to bad weather, the agriculture minister said on Thursday, citing industry sources. The country's coffee crop was hit by unusually cold weather in the high-altitude growing regions last week, damaging maturing cherries, but technical studies quantifying the losses are still in process.

Kenya : The Kenya Planters’ and Co-operative Union, which is currently under receivership, will resume milling coffee on Monday. In an advertisement appearing in national newspapers, Deloitte Consulting Limited, the appointed receiver manager, has asked farmers to begin delivering their coffee to their stores across the country. “The receiver managers wish to inform growers that KPCU will resume milling operations on Monday January 18, 2010,” the Advert said.“We further advise growers to commence deliveries of their parchment and mbuni coffee to our stores country wide.” The announcement comes two weeks after the receiver manager forcibly took over the union’s Wakulima House, which is the head office, and other assets that include warehouses and milling plants in Dandora, Meru and Sagana. KPCU was placed under receivership in October last year by Kenya Commercial Bank over a Sh644 million debt, but the receiver manager took a long time to take over the assets after the board of directors blocked it from accessing its offices. Co-operative and Marketing minister, Mr Joseph Nyagah, said the receivership was the first step in reviving the union that handles coffee for 300 coffee societies, mainly small-scale farmers, in the country. The announcement is a relief to farmers, particularly at this time when coffee production is expected to increase due to the rains across the country. When the union was placed under receivership, its bank accounts were frozen and workers went unpaid for three months. Farmers who had delivered their coffee were also waiting to be paid their dues.

Burundi : coffee output for its 2010/11 season is expected to rise by 361% to 30,000 tonnes from 6,500 tonnes previously, thanks to good rains and use of fertiliser, an industry official said on Wednesday. It has rained on time and this is good for the flowering of the coffee.

Uganda : The Uganda Coffee Development Authority expects a 12 percent drop in January coffee exports to 290,000 bags, from 329,211 bags worth US$30.5 million in the same month last year. “Some pipeline stocks are likely to be released to the market in preparation for payment of school fees, the effect of the dry spell in the past notwithstanding,” the Authority reported. “The cumulative total for the first quarter (October to December) of the current coffee year 2009/10 stood at 706,961 bags worth $66.5m. This is a decrease of 5.1% and 15.6% in volume and value respectively compared to a similar period last year”. “The drop is attributed to the prolonged dry spell that affected coffee bean development, resulting in very low outturn, which ranged between 35% and 45% for the initial harvest in most parts.” In December, the east African nation sent out 272,779 bags worth US$25.8 million compared with 298,648 bags and US$30m in the same month in 2008. Coffee volumes are projected to rise by 11.5% in the 2009/10 season to 3.4 million bags versus last year, boosted by new trees coming into production and better weather, the body has said.

Zambia : According to statistics, Zambia’s coffee production has tumbled over the years from highs of 6,500 metric tonnes in 2004 to lows of 1,500 metric tonnes this year. Zambia Coffee Growers Association (ZCGA) general manager Joseph Taguma lamented the country’s decrease in coffee production and attributed it mainly to a lack of access in long-term financing.

Starbucks is continuing to prove that it has successfully turned its fortunes around as it sees its latest quarterly profits more than triple. The US coffee chain giant made a net profit of $241.5m (£148m) in the three months to the end of December, compared with $64.3m a year earlier. Buoyed by extensive cost-cutting work over the past year, the firm has also won back customers in its home market. Same store US sales rose 4%, their first rise in more than two years. Starbucks' total revenues for the quarter rose to $2.7bn from $2.6bn a year earlierIts results beat market expectations. The firm has cut thousands of jobs and shut hundreds of under-performing stores over the past two years to trim costs. It has also introduced new, lower price coffees to win back customers temped away by cheaper rivals.

Other Commodity News : White sugar futures in London touched record highs, while ICE raws hovered around a fresh 29-year peak with supplies tight and many key importers expected to need to make further purchases. You would struggle to call a top to this market at the moment. Thirty cents is an easy number for everyone to pin their hat on, it is round, it is fairly large and it is not that far from the current market.

Rubber : Thai benchmark RSS3 rubber rose to $3.25 a kg on Wednesday, revisiting a 56-year peak scaled in mid-2008 on gains in Tokyo futures and prospects of demand from tyre makers and Chinese buyers, dealers said. Speculative buying driven by strong oil and steady physical demand have sent the most active rubber contract on the Tokyo Commodity Exchange, currently June 2010 , to a 16-month high, lifting cash prices in Southeast Asia