Coffee Market Report 10th to 14th March 2014

COFFEE MARKET NEWS 10^th March – 14^th March 2014

Coffee Prices, Futures and Currency close levels:

Futures Markets:

Arabica:  All is not lost for the Arabica market. The reality is that it is only roughly 8 cents from the recent high. This is just a slight correction in the grand scheme of things and until there are further developments in terms of the drought in Brazil then the market won’t see a dramatic reduction in price if at all.  The NYC at least could catch its breath this week!

Robusta: London robusta hit a 17-month high this week, tracking gains in New York arabica, which has surged this year on concerns over dry weather in main coffee producer Brazil. Robusta in Asia are either traded above or at discounts to London futures.

Currency: On the FX markets, GBP/USD pushed to a high of $1.6716 before easing back following the positive US data releases and is testing support around $1.66 in early trading this morning. Meanwhile, EUR/USD lost a cent from a high of $1.3967 following comments from ECB President Draghi that a strong euro was putting deflationary pressure on the euro zone economy.

Physical Markets:

Brazil: Brazil’s coffee exports will rise 6 percent this year due to hefty stocks, which should offset a severe drought that has driven up futures prices of the commodity in recent weeks, the country’s export association Cecafe said on Tuesday. Cecafe General Director Guilherme Braga told Reuters by phone that exports are expected to reach 33 million 60-kg bags in 2014, up from 31.1 million last season. Brazil’s Agriculture Ministry declared a state of emergency in Minas Gerais, the main coffee-producing state, due to the threat of a crop-damaging insect known as the coffee borer, the government’s national gazette said on Thursday.

Colombia: Most of coffee growing areas had rain in last two weeks of February, only farms based in low altitude have had normal flowering for the main crop. In higher altitudes begins 1600 meters most of producers worrying about lack of sun, which moves their crops a bit late.

Central America: Central America’s worst-ever coffee leaf rust disease may not be as bad as expected, the International Coffee Organization (ICO) said on Thursday, with the drop in production estimated around 24 percent since the 2011/2012 crop year. In its monthly report, the ICO cited data from Promecafe, the Central American coffee body that pegged production losses due to the devastating fungus in 2013/14 at 11.67 million 60-kg bags, down from 15.38 million bags two years prior, according to Reuters’ calculations. This is roughly 8 percent of the world’s total coffee production expected in 2013/14. This compares with 2011/12, prior to the infestation, when the region’s production accounted for nearly 15 percent of global output.

Kenya: The top price of Kenya’s benchmark coffee grade rose by 21% per 50 kg bag at this week’s auction from last week, the Nairobi Coffee Exchange (NCE) said on Tuesday. A total of 26,448 bags were offered, with 10,827 sold. Last week, 28,891 bags were offered and 13,607 sold.

Uganda: exports in February rose by 2.9 percent year-on-year to 354,837 60-kg bags, helped dry weather that has hastened the drying of beans, a state agency said on Thursday. “The central and eastern regions where harvesting is underway have been witnessing dry weather which is very important in fast drying of the beans,” said a source at the state-run Ugandan Coffee Development Authority (UCDA).

Indonesia: Higher-quality robusta from Indonesia changed hands at hefty premiums this week, but the overall physical market was quiet after recent rallies in London chased buyers away, dealers said on Friday. “Prices are all over the place, and I think everybody is confused,” said an exporter on Indonesia’s main island of Java. “There were several deals this week but only for nearby shipment and high quality beans.”