Weekly Market Report 5-9 July 2010
COFFEE MARKET NEWS 5th – 9th July 2010
Commodities began the third quarter with a near 5% collapse in oil prices and a sharp sell-off in metals as fears of a global economic slowdown spread. We are expect a period of slower growth, as the enormity of problems in Europe, possible slowdown in China and the U.S. take hold.
Futures Markets:
Arabica : ICE coffee futures edged down while raw sugar and cocoa were little changed in thin volumes as the markets adjusted after last Monday's US holiday, (Independence day).) Coffee futures settled more than 4% lower on Tuesday after the long holiday weekend as speculative funds led profit taking liquidations. Warming temperatures in Brazil’s extended weather forecast as well as technical cues and pressure from liquidations in London beginning Monday all led to speculative liquidations which were only accelerated, by prepositioned sell stops, once the market broke through the 160.00 and 158.50 levels. ICE Arabica coffee futures edged up in early trade on Wednesday, rebounding slightly from the worst daily loss in eight months. Traders say Arabica coffee, one of the best performers in the Reuters-Jefferies CRB index in 2010, has become technically overbought and was weighed by down profit-taking.
Robusta : Robusta futures settled sharply lower on Tuesday amid continued long liquidations after a period of recent rallies.
Currency : The pound appears to have found new stable levels after a period of uncertainty. It remains within a range against the US Dollar although recent impressive gains against the Euro have been given up in the last week.
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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157.65 (-6.65)
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163.05
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162.10
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163.85
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Lon Jul-10 $/t
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1710 (-40)
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1650
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1669
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1696
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1709
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£/$
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1.5179
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1.5147
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1.5209
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1.5129
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1.5059
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Physical Markets:
Brazil :Coffee crops in Brazil are unlikely to face frost in July, according to a weather report from Sao Paulo-based forecaster Somar Meteorologia. The state that there is just one polar mass coming to Brazil this month, and it won’t make it to coffee producing areas. It is too soon to determine frost possibilities for August because of the influence of the La Nina weather pattern. In fact, La Nina, caused by cooling temperatures in the Pacific Ocean, may make polar masses “more intense.”
Brazil exported 1.79 million 60-kg bags of green coffee in June, down 18% from 2.17 million bags in the same month of last year, according to the Council of Green Coffee Exporters, Cecafe. June was the final month of the 2009/10 (July-June) coffee harvest and Brazil is now officially in its 2010/11 campaign, unlike countries that go by the international (Oct-Sept) crop year that are still in the 2009/10 season.
Colombia :After dipping to record lows, coffee production will rise “little by little” as Colombian producers replace aging trees,Colombia's coffee production is seen rising 31% to around 900,000 bags in June compared with the same month last year, according to the the country's coffee growers federation. The world's largest producer of washed arabica beans is expected to produce 10 million to 11 million bags in 2010 after output fell to 7.8 million bags in 2009, its lowest level for 33 years due to drought and a crop renovation program.
Honduras : Honduras coffee exports up in June, Costa Rica down
Coffee exports from Honduras rose 17% in June, while in fellow Central America producer Costa Rica, exports fell in the month. Honduras' national coffee institute said it exported 470,864 bags of coffee in June. Cumulative exports for the region's No. 2 coffee producer during the 2009/10 coffee year, which began in October, were 2.86 million bags, up 14% from the same period in the previous cycle.
Coffee exports from Honduras rose 17% in June, while in fellow Central America producer Costa Rica, exports fell in the month. Honduras' national coffee institute said it exported 470,864 bags of coffee in June. Cumulative exports for the region's No. 2 coffee producer during the 2009/10 coffee year, which began in October, were 2.86 million bags, up 14% from the same period in the previous cycle.
Costa Rica :The country slightly increased its estimate for the 2010/11 coffee harvest citing favourable weather and improved fertilization, according to the national coffee institute, (Icafe). The institute also said, the country will produce 1.66 million bags of coffee in the new season, which begins in October, around a 12% increase year-on-year and up from an earlier forecast.
Tanzania : Auctions have now finished as exporters take a break – our single estate (Kiran and Kongoni) are en route to Port.
Kenya : Kenya's Coffee Research Foundation (KRF) has announced the release of a new variety of coffee called Batian.
Rwanda : The program to improve quality continues but as Fairtrade suppliers walk away from contracts we remain sceptical about the honesty of growers and exporters.
Uganda : Ugandan coffee exports in June slipped 7.5% from the same month last year to fall below expectations, according to an official at the state-run Uganda Coffee Development Authority (UCDA). Africa's second largest coffee producer shipped 234,956 60-kg bags of coffee last month, lower than the expected 250,000 bags. In May 177,300 60-kg bags were exported. Uganda expects coffee exports of about 265,000 60-kg bags in July, little changed on the same month last year, as farmers look to sell off stocks. Good prices have created a lot of excitement among farmers and they're rushing to dispose of all their stocks before prices come down again.
India : coffee exports jumped about 43% to 200,830 tonnes between Oct. 1, 2009 and July 5, 2010, according to the state-run Coffee Board. India sold 20.44 billion rupees worth of coffee during the period, up from 15.53 billion rupees a year ago.
Papua New Guinea : According to reports, coffee buying prices in Papua New Guinea increased by 20% in June compared to the same period last year.
Indonesia : Reports from Bandar Lampung show Indonesia's coffee exports from Sumatra fell nearly 60% in June compared to the same month last year as prolonged rains damaged crops. The reduced shipments from the world's second-largest Robusta producer may spur further gains in London Robusta coffee futures , which rallied to a 20-month peak on last Friday (2nd July) of $1,795 a tonne on a drawdown in inventories and a soft dollar.
Vietnam : Vietnam may not see a rise in coffee output in the 2010/11 season, according to the International Coffee Organization's (ICO) June report that pegs production for the next crop year at 16 million to 18 million bags. In its May report, ICO had forecast a rise in Vietnam's 2010/11 output from the 18 million 60-kg bags estimated for 2009/10.
ICO : Economic recovery, diversification of product lines, and higher demand among consumers are expected to boost Thailand's domestic market for canned coffee drinks by 4-6% this year to a market value of around Thai Bhat 10 billion (US$ 310 million), according to forecasts from the Kasikorn Research Center. This leading Thai think tank expected that the World Cup 2010 in South Africa will also have helped to boost total sales of canned coffee this year as competitions in semi-final, and final matches were be broadcast live in Thailand after midnight, from1.30-3.30am.
UK : Starbucks Coffee Company is unveiling a major marketing push to support the launch of its Via Ready Brew coffee in Tesco stores throughout the UK.
Below a small basic graph for you to show your customers - may help explain why your prices are going up!
From London on an overcast & drizzly morning!
(where's the summer gone? gardens need the rain though....)
Alok Vohora