Weekly Market Report 17 - 21 May 2010
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COFFEE MARKET NEWS 17th– 21st May 2010
Futures Markets:
Arabica : Coffee, cocoa and sugar extended losses alongside other commodities last week as investors once again shunned risky assets with the US Dollar rising against a basket of currencies amid worries over Euro zone debt. Bearish outside market pressures dragged soft commodities down, as oil prices fell below $70 a barrel and the Euro tumbled to four-year lows against the dollar.
Robusta : The Liffe market closed lower as both Funds and origin sold. In Vietnam, farmers have begun selling. The government program of stockpiling is proceeding, but at a very sow pace. Additionally, there are expectations of a big Brazilian crop.
Robusta : The Liffe market closed lower as both Funds and origin sold. In Vietnam, farmers have begun selling. The government program of stockpiling is proceeding, but at a very sow pace. Additionally, there are expectations of a big Brazilian crop.
Currency : Stocks fell and the Euro slumped to a four-year low against the US Dollar on Monday as Asian markets caught up with the sell-off in the West, shrugging off encouraging data and remaining fixated on troubles in the Euro zone. Brokers report: We have a recovery but it is a feeble one. If you load on to that recovery a severe dose of fiscal austerity, the prospects then for a sustainable recovery are strained.
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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132.55 (-1.75)
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134.25
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133.80
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131.65
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132.40
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Lon Jul-10 $/t
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1352 (-24)
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1369
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1336
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1334
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1334
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£/$
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1.4462
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1.4317
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1.4410
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1.4440
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1.4469
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Physical Markets:
Brazil : Current 2009-10 crop is exhausted; Very few offers coming through, despite demand here for typical Santos.
Colombia : The saga continues; Is there coffee or not, how much, when will it be available? The midcrop or Mitaca is down 20% as the Broca infestation reduces the amount of exportable coffee.
Mexico : At the current rate at which temperatures are rising, there could be at least a 30% net loss in land suitable to farm coffee in Mexico and Central America by 2050 forcing many farmers to turn to different crops. This is according to a team of scientists who started studying 7,000 small farms in Guatemala, Mexico, El Salvador and Nicaragua in 2009; the estimate is based on data collected so far. The researchers map the farms with satellite positioning devices to collect data on altitude and crop production. That information is then cross-referenced with climate change models to track how different areas will be affected by hotter weather and changes in rainfall.
Guatemala : Exportable coffees have now sold out with exporters concentrating on meeting shipment deadlines.
Nicaragua :exports for the current 2009-10 crop were up 30% to 919,908 bags, compared with 706,722 bags during same period last year crop, according to Cetrex.
Tanzania : Some very fine cupping Estate Arabicas coming through.
Kenya : The auctions are becoming tests of endurance. Last Tuesday 21,000 bags took 9 hours to sell in intense bidding with a wide range of qualities on offer.
Rwanda : The new crop will start to appear shortly. We await evaluation samples.
Uganda : Coffee exports in April are projected to be approximately 220,000 bags, the main harvesting season in Masaka and south western regions has started and is expected to be higher than the previous year due to the favourable weather. Farmers are likely to offload whatever stock they have to create room for the incoming stocks. India : Coffee growers and the trade feel that the 2010/11 crop size could be as big as that this year, where the post-monsoon estimates stood at 289,000 tons. The earlier-than-expected blossom showers in February, in certain coffee growing areas could advance the harvesting season by a month. In the Chikmagalur region in particular, the fruit may mature in four or five stages. Growers estimate that 15% of the coffee crop as a whole will be ready two weeks to a month earlier than usual – Arabica in October and Robusta in December.
Vietnam : Coffee prices in Vietnam fell, weighed down by losses on international markets and the slow implementation of a Vietnamese government-backed plan to stockpile beans. Sluggish trading in the past month due to uncertainties surrounding the stockpiling plan would result in a fall in May's coffee shipments from Vietnam, the world's second-largest coffee producer after Brazil.
Consuming Country News : Tim Hortons, the iconic Canadian coffee and doughnut chain, intends to take its brand global in the next four years. Promising shareholders at the company's annual general meeting a "dramatically different" company in four years, chief executive Don Schroeder said it is looking to extend beyond Canada and the United States. "We are in the process right now of developing an international strategic plan, and we are going to present that to the board next month," he said after the meeting. "Later this year, assuming it is approved, we will make a further announcement (about) the next step."
USA : The JM Smucker Company announced yesterday that it will increase the list price for the majority of its Folgers, Dunkin' Donuts, Millstone, and Folgers Gourmet Selections coffee products sold in its US retail coffee market effective immediately (by approx 4% citing higher costs of production).
CoffeeNetwork : The global coffee market could see a surplus of 7.3 million 60-kg bags in 2010/11 as production reaches record levels, swinging from a deficit of 1.9 million in 2009/10, analysts CoffeeNetwork said in a report on Tuesday. The surplus, which partly reflects Brazil's "on" year in its biennial crop cycle, comprised a 5.0 million bag surplus for Arabicas and 2.3 million bags for Robustas. The world coffee market is facing a possible moderate production surplus in the year (2010/11). This means a continuation of the recent pattern of a global output surplus one year followed by a global output deficit the next. According to CoffeeNetwork their world production forecast for 2010/11 was based on a Brazilian crop of 49 million bags.
From London on a warm and sunny Morning (16 Deg C at 5am!).
Kind regards
Alok VOHORA