Weekly Market report 31 May - 4 June 2010
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COFFEE MARKET NEWS 31st May – 4th June 2010
Futures Markets:
Arabica : Coffee futures rallied nearly 2.5% on Tuesday before paring gains towards the end of the week as speculators hurried to cover short positions amid weather concerns in both Central America and Brazil. Heavy rains in El Salvador, Guatemala, and Honduras over the long weekend in both UK & USA, as well as near freezing temperatures forecasted for the southern tip of the coffee belt in Brazil pushed small to medium specs out of their short positions. Sharp movements in the EUR/USD from early in the week also affected prices.
Robusta : the activity in London was fairly light. With a lack of coffee related news, the Robusta market seems to be in a holding pattern until the major commodity markets make a move.
Currency : World stocks fell and the Euro hit a four-year low against the dollar as expectations that slowing growth in China and the Euro zone would hamper the global economic recovery hit riskier assets such as the commodity markets.
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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Closed
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136.55 (+2.30)
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135.40
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135.60
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133.75
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Lon Jul-10 $/t
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Closed
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1349 (+11)
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1338
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1346
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1336
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£/$
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-
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1.4658
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1.4656
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1.4610
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1.4433
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Physical Markets:
Brazil :The Brazilian coffee belt was forecast to face the risk of frost on Saturday 5th June, with temperatures below freezing temperatures at ground level, as the strongest polar mass of the autumn in South America moved Northwards. Needless to say at the time of writing this report on Monday morning nothing significant has occurred.
Colombia : Differentials continue to firm as availability becomes scarce once again.
Mexico : We have seen great demand for Mexicans as a Colombian substitute.
Central America: Coffee growers brace for pests after storm - Prolonged humidity in the wake of deadly Tropical Storm Agatha may expose coffee plants in El Salvador and Guatemala to potentially destructive pests and diseases, according to worried growers. Central American coffee output has fallen this season, hurt by extreme dry weather and heavy rains, and the aftermath of the storm that killed at least 113 people across Central America is a new concern.
Guatemala : coffee growers brace for storm damage - Some of Guatemala's coffee trees are at risk of a destructive fungus in the wake of deadly Tropical Storm Agatha but mudslides and collapsed bridges make it hard to assess damage, according to the growers group Anacafe which also said landslides were unlikely because coffee trees stabilize soil, protecting farms from the storm that hit the country.
Reuters say : Prolonged humidity in the wake of deadly tropical storm Agatha, which dumped more than one metre of rain in mountainous western Guatemala, is fertile ground for the Ojo de Gallo fungus, or Mycena citricolor. The Ojo de Gallo pest grows on coffee tree leaves and causes them to fall, exposing the cherries to wind and rain and can make them rot. The pest hurt Costa Rica's coffee crop in the 2006/07 season, slightly reducing the harvest. The local office of Guatemala’s National Coffee Association (Anacafe) in the western San Marcos region said more heavy rain could also cause berries to fall, but that the impact on the 2010/11 crop is unknown. Farmers in El Salvador are also worried that high and sustained humidity could bring on the coffee borer beetle, an extremely harmful pest that eats the coffee berries. Blocked roads have made it impossible to reach many farms in the western part of the country.
Tanzania : Robusta availability better than Uganda but at steep premiums. Estate Arabicas being hand picked.
Kenya : auctions fortnightly most availability from the miscellaneous catalogues. Mbunis & Grinders in the main.
Rwanda : New season offers being seen prices still very firm as exporters react to Colombia shortages.
Congo : Exporters have pushed up prices to levels not previously seen.
From London on a bright but breezy Summer morning.
Alok Vohora
