Weekly Market Report 7- 11 June 2010
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COFFEE MARKET NEWS 7th– 11th June 2010
Futures Markets:
Arabica : coffee futures rose slightly on Tuesday as spec and fund buying supported the market. A brief respite in the recently sharply up trending dollar attracted speculative buying to the softs commodity complex. In coffee, however, more than two thirds of the volume once again focused on spread trading. Futures prices soared higher pushed by a number of bullish factors. In addition, a violent short squeeze in London coffee created spillover buying in New York. Rumors of a large amount of certified coffee business between large trade houses only added to today’s bullish sentiment. Buy stops were triggered sending the market to new highs in a matter of minutes.
Robusta : the Robusta market had several very active session after weeks of remaining in lull. Activity was dominated by heavy spread buying, which tightened forward structures and initiated some fund short covering. As the market settled at a multi week high, some origin selling could be seen in the short term.London coffee futures rallied to trade around 7-month highs on Thursday, with dealers citing fund buying.
Currency : On currency markets, the euro dropped 2.8% over the weekend to $1.188, before rebounding above $1.19. The single currency hit an 8-year low against the Japanese yen of just over 108 yen, before recovering above 109 yen. Meanwhile, the pound continued to split the difference between the dollar and euro.
Gold edged down, after rising 2 percent to just below a lifetime high the previous day as investors sought a safe haven from volatile currencies, falling stock markets and euro zone credit contagion fears. There's still some selling around in Asia (but) everybody is still worried about the banking system in Europe, overall sentiment remained bullish.
The pound has fallen after a credit rating agency warned that the UK faced a "formidable" challenge to bring down its budget deficit. It fell 1% against the dollar to $1.437 after Fitch published its report
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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133.10 (-0.65)
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133.55
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134.45
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137.00
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144.95
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Lon Jul-10 $/t
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1338 (+2)
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1341
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1383
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1473
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1560
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£/$
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1.4471
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1.4385
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1.4523
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1.4709
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1.4513
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Physical Markets:
Brazil :Coffee crops in Minas Gerais are free from a new frost threat until at least June 20, according to the Brazillian government’s Meteorology Institute, or Inmet adding that the strongest polar mass moved away from producing areas in the country’s southeast. Rains in the Minas Gerais region helped avert damage because frost usually occurs when skies are clear.
Colombia :Colombia's coffee production rose 17% in May while exports fell 1%. Colombia, now the world's No. 4 coffee exporter after a dip in output, saw its production fall sharply last year due to drought, some insect infestation and a tree renovation program that took some areas out of production.
Uganda : The Uganda Coffee Development Authority (UCDA) revised its estimate for the 09/10 harvest to 2.8 million bags down from 3.05 million in 08/09. Dry weather affected production and harmed trees. The recent rains have delayed ripening and drying of cherries. The Authority has also reported that exports plummeted 19.6% in May to 177,300 60-kg bags compared with 220,620 bags in the same month in 2009. Erratic and adverse weather conditions, with last year's drought, followed by heavy rains, contributed to the lower output and affected quality as well. UCDA expects coffee yields in the second half of the coffee year to peak in June-July, boosted by harvests from western Uganda which produces 45% of the entire crop.
Indonesia : Robusta coffee beans changed hands at a small premium to London futures, but some exporters were reluctant to sell after rains delayed harvests. Although arrivals began to pick up in the world's second-largest robusta producer after Vietnam, offers for prompt delivery were small. The market was also abuzz with talk that some suppliers were oversold, raising fears of defaults.
From London on a bright and warm morning.
Alok Vohora
From London on a bright and warm morning.
Alok Vohora