Weekly Market Report 10 - 14 May 2010
COFFEE MARKET NEWS 10th – 14th May 2010
Futures Markets:
Arabica : Trade buying and short covering initiated a midweek move higher. Prices gained momentum as some buy stops were triggered. Last Friday’s sudden collapse was not isolated. The entire commodity spectrum dropped on fears of the return of stagflation.
Robusta : prices in London continue to shadow the trend in Arabicas. However, there remains support in the mid 1300s as traders take a view on the total supply situation.
Currency : On fears of the true extent of Greek indebtedness the Euro hit a multi-month low against Sterling and also fell for the tenth day consecutively versus the Dollar breaching the crucial support levels. The Euro slipped after Germany demanded painful new austerity measures from Greece in return for badly needed financial aid, with investors likely set to push high risk European sovereign bond yields up further.
In addition, the Euro sank to four-year lows against the Dollar as uncertainty over Europe's debt crisis drove investors to move more money from stocks into supposed havens such as Gold and Asian bonds.
Gold firmed upwards towards another record level, while Gold priced in euro and sterling struck all time highs as falling currencies and fears a European bailout package could hurt, rather than help a recovery, spurred investor buying
Oil fell below $70 a barrel, to its lowest in more than three months, extending a loss of nearly 17% over the past two weeks on fears over Europe's debts, the weak Euro and swollen US oil inventories.
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 Jul-10 c/lb
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134.15 (+0.25)
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136.15
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136.85
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137.10
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134.30
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Lon Jul-10 $/t
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1385 (+14)
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1398
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1408
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1402
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1376
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£/$
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1.4861
|
1.4933
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1.4827
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1.4634
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1.4546
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Physical Markets:
Brazil : Private stocks of coffee in the world’s top producer Brazil will fall to around 1.5 million by the end of May, their lowest level in five years. In April Brazil exported 3 million bags of green coffee, according to the Ministry of Development, Industry and Foreign Trade. The corresponding figure in March was 2.491 million bags. In value terms, exports totalled US$ 346.6 million in April whereas in the same month last year, exports amounted to US$ 294.8 million.
Colombia : Flow of coffee still more like a trickle, local yields down due to hot weather in January and February followed by Broca infestation.After 7 months of drought, Colombian coffee-growing regions recorded decent rainfall in April, marking a turning point for plantations, which have suffered over the last 2 years. Differentials remain firm.
Peru : New crop offers starting to appear, very firm diffs seen, same high levels for forward shipments. For the first time since records began the largest destination for Peruvian coffee was Colombia!
Mexico : The country is increasing planting of Robusta trees as it aims to become one of the world's top producers of instant coffee, despite objections from some farmers who worry the varieties fetch lower prices, the agriculture ministry and the national coffee association said. The government is partnering with Swiss food giant Nestle to provide Mexican farmers with improved, high-yielding types of Robusta to cut down on the 450,000 bags of coffee Mexico imports each year.
Tanzania : heavy rainfall reported in coffee growing areas.
Kenya : auctions now on a fortnightly basis. Fly crop will start to appear end of May.
Rwanda : First shipments of the new season expected in September.
Uganda : Spot Robustas very hard to find. Expecting more coffee to become available late May once the rains abate.
Indonesia : USDA’s Foreign Agricultural Service recently released its coffee annual report for Indonesia, which forecasts 2010/11 coffee production at approximately 576,000 tons (9,600 million 60-kg bags). Indonesian coffee consists primarily of Robusta at 486,000 tons. On average, 67% of Indonesian coffee is for export, with 33% consumed in the domestic market. In 1989 consumption was about 500 grams per capita. Since then, consumption has increased steadily, with annual consumption currently at about 850 grams per capita, a 70 percent consumption increase over the course of 20 years.
Vietnam : Vietnam's coffee exports this month rose 4.8% from a year ago to an estimated 130,000 tonnes, according to a government spokesman. Total coffee exports for the first seven months of the crop year (which starts in September) stand at 752,600 tonnes, down 5.4% from a year earlier.
Vietnamese exporters may have to delay coffee loading in the coming months, as supply of beans in the domestic market has slowed with farmers holding back sales due to a stockpiling plan and falling prices. The delays in shipment from the world's second-largest exporter, after Brazil, could lend some support for London Robusta futures market where the price of beans (mainly used for making instant coffee) has been falling recently due to the strengthening Dollar.
ICO :
From London, on a bright Spring morning.
Alok Vohora
