Weekly Market Report 12 - 16 July
COFFEE MARKET NEWS 12th – 16th July 2010
Gold slipped as physical buyers retreated and investors turned to equities after bullion failed to sustain previous rallies.
U.S. crude oil futures hovered at around $76 a barrel as China's bigger-than-expected trade surplus in June eased worries about a slowdown for the global economic recovery and oil demand.
Liffe cocoa was expected to open within site of last Wednesday's 32-year high after better-than-expected grind data, with the July contract beginning its final trading day commanding a huge premium which could see virtually all available graded stocks tendered.
Futures Markets:
Arabica : coffee futures settled modestly higher as the week progressed. Activity was light with the majority of volume generated by small and medium specs. Option activity was moderate. During the week, Arabica futures finished modestly up, however, recent added volatility led the market to trade in a wide 1,140 point range. Support and resistance for September coffee stand at 155.00 and 170.00 cents a pound respectively. Nearby physical market remained slow, differentials fell slightly but roaster now looking ahead.
In London, Robusta futures followed the action in New York trading sideways all week. Activity was subdued. In Vietnam, dry weather remains over the coffee areas. Rains during June were 80 % lower than the average rainfall for the June month on a year by year basis. Weather for July is expected to be drier.
Currency : Gloom over the future of the Euro zone is starting to lift after months of crisis, with policy makers sounding increasingly confident that the worst is over. There are still plenty of risks. Economic growth is fragile, governments must keep the political will to impose austerity steps for years to come, and small banks in the hardest-hit countries remain unable to borrow in the markets, making them dependent on the European Central Bank for funds. It's too early to call the end of the euro zone crisis, but signs are growing that Europe may have turned a corner in its struggle to restore financial stability. French Economy Minister Christine Lagarde, mangling a treasured Winston Churchill quotation, said last week: "We are in the middle of the beginning of the end."
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 Sep-10 c/lb
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163.55(-0.30)
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165.65
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164.90
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167.10
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167.05
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Lon Sep-10 $/t
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1705(-4)
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1721
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1731
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1753
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1764
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£/$
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1.5015
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1.5168
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1.5273
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1.5388
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1.5301
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Physical Markets:
Brazil :Coffee farmers in Brazil are picking their cherries quickly to take advantage of high world prices. Growers are securing good prices of over 300 Brazilian reals per bag for their arabica beans as local and global prices rise on tight supplies. The arabica coffee harvest reached 45% as of July 7 compared to 40% in the prior week and 40% at the same time a year ago, according to coffee analysts at Safras. Brazil's robusta coffee is almost fully harvested. Safras estimates Brazil's 2010/11 crop at 54.6 million bags, of which 41.5 million bags will be arabica beans.
Colombia : The status quo remains in place, rains continue, however, dry weather is now needed for the final stage of the main crop and will have an impact on the flowering of the mitaca.
Guatemala : New crop business yet to get underway
El Salvador : Coffee exports from El Salvador dropped 58% in June to 65,946 bags, according to the national coffee council. The council said exports were 156,182 bags in the same month a year ago.
Tanzania : New crop offers being seen. Also a new Organic Estate on Kilimanjaro, which could be of interest. Our Oldiani coffees enroute – can’t wait to have them here
Kenya : The US Department of Agriculture’s Nairobi bureau, in its latest report, says Kenya’s coffee production is likely to fall 8.2% to 670,000 bags in 2010-11, the lowest amount produced in more than 30 years.
Uganda : Robusta is flowing out as the main season takes hold. Arabicas still slow.
Indonesia : Indonesia's coffee exporters are reluctant to offer beans as they struggle to fulfil last season's contracts, leading to a market tightness and narrow discounts, traders said on Wednesday. Arrivals have been picking up in Indonesia's main growing island of Sumatra as the harvest is underway, but not much is on offer as exporters rush to fulfil old contracts or stockpile for delivery at the end of the year.
India : Increasing availability as Plantation arabica being shipped.
With appologies for the delay - due to your corresondent's dental appointment.
From London on a bright and warm summer's morning.
Thanks and kind regards
Alok Vohora
D.R. Wakefield & Company Limited