Coffee Market report 12th May to 16th May 2014

COFFEE MARKET NEWS 12^th May – 16^th May 2014

Coffee Prices, Futures and Currency close levels:

Futures Markets:

Arabica: Friday’s market closed on a low giving back all the gains that had been made on Thursday, fuelling a bearish trend that is likely to prevail for the remainder of this week. Support for the market is at182.75. If we close below this level, we could test levels of 178.00.

Robusta: London mimicked NYC last week ending the week on the low. A rise in certified stocks (higher than expected) is likely to add more pressure and test the 2000 level.

Currency: On the FX markets, EUR/USD fell to an 11-week-low of $1.3647. Meanwhile, GBP/EUR picked up to a high of €1.2278.

Physical Markets:

Brazil: Brazil cut on Thursday its forecast for the new coffee crop under 45 million 60-kg bags, 9 percent less than in January, as a devastating drought cut more deeply than expected into output from the world's biggest producer. The latest estimate by Conab; the government's crop supply agency, reinforced concerns about the impact of scorching heat and a prolonged dry spell earlier in the year, sending arabica prices up over 7 percent.

Honduras: expects coffee exports this season to fall by nearly 7 percent compared with a prior estimate mostly because smugglers are taking beans to neighbouring Guatemala where prices are higher, a top coffee official said on Friday. Honduras, Central America's top coffee producer, sees exports during the current 2013/2014 season totalling 4.2 million 60-kg bags, down nearly 7 percent from a February forecast.

Kenya: FAS/Nairobi forecasts an increase in Kenya’s coffee production to 900 thousand bags in the marketing year (MY) 2014/2015 partly due to an ongoing expansion program by the Government of Kenya (GOK). Increased adoption of improved varieties by farmers, and higher global coffee prices are also expected to boost production and exports. Legal and institutional reforms are also being implemented in the sector.

Tanzania: FAS/Nairobi forecasts an increase in Tanzania’s coffee production in the marketing year (MY) 2014/2015 to 1.15 million bags attributed to the biennial bearing cycle. The Government of Tanzania (GOT) has put in place a strategic plan whose key objective is to double production by 2021. Exports in MY 2014/2015 are expected to hit a record high of 975 thousand bags.

Uganda: FAS/Nairobi forecasts that Uganda’s coffee production will continue on the current growth trend to reach a record 4 million bags in the marketing year (MY) 2014/2015. Exports will also increase to 3.8 million bags in the MY 2014/2015 as the country expands production and diversifies its markets. In addition, the Government of Uganda (GOU) is implementing the recently launched national coffee policy. Key objectives of the policy include sustainable production systems, increased domestic consumption, value addition and enhancement of local research capacity.

India: prices in India displayed a mixed trend in the last week's auction following a similar trend in overseas markets, amid weak domestic buying interest. About 64,000 kg coffee of the total 342,721 kg on offer was sold. Arabica accounted for 159,022 kg on offer, while robusta made up 183,699 kg.