Weekly Market Report 14 to 18 May 2012

Futures Markets:

Arabica : NY Market once again moved sideways. The COT (commitments of traders) figures highlight that some short covering has taken place by speculators, although this could be some profit taking against other positions. NY found some specs appetite through the movement of $.

Robusta : The market had another strong performance in the week where the bulls were pushing the market higher in good volume. London market has been bolstered by the combination of fund new longs and roaster buying whilst sellers have thinned out. This lack of major resistance because most Vietnamese hedging has already been done and new hedging form Indonesia and Brazil is yet to come has allowed  Robusta market to climb higher.

Currency :  The euro bounced back from its recent lows as investors’ fears regarding the Greek political  crisis began to subside, climbing over a cent against USD and Sterling. Sterling also slipped against both USD and Euro as speculation needs for more QE returned.

Futures and Currency close levels:

Physical Markets:

Brazil : General activity is slow even though prices have increase a bit, producers still holding off to get better deals. Harvest is still not in full steam. Some of the first new crop coffees, small quantities, that were lying on the drying patio were affected by rains that reached the coffee belt in the last days.

Colombia : Mitica has already started which allow producers and exporters to start offering more volume with a lower differential to overseas. ICO revise down the total output of the current season to 7.8 million from 8.5 million.

Costa Rica: In 2011/12, the coffee production increased by 13.6%, reaching 1,796,000 bags. The production is expected to reach 1.8 million bags in 2012/13 as producers have been able to improve fertilization and other agricultural practises as a result of high coffee prices.

Honduras: According to US Department of Agriculture report, the country increased planting and gets good growing conditions which generate more volume of coffee. Coffee production is forecast 5 million bags for the new season 12/13.

Peru: USDA forecasted coffee 2012/13 production at 4.8 million bags, 7 % decrease from the all time record crop of 5.15 million bags in 2011/12 crop.

Kenya : At the last auction, 18,792 bags were offered for sale and 6,092 were sold. The AA quality price fall by 10$/50 kg compared to the previous auction, said the Nairobi coffee Auction.

Uganda : Exports in May 2012  fall to 180,000 bags due to rains being received which delayed the drying and transport process. Also, there were minimal robusta stocks at exporter level, said Uganda Coffee development Authority.

Ethiopia: Exports in 2011/12 are significantly lower because of new directive mandating that coffee to be shipped in bulk which led many traders holding onto beans. The decision being taken after the peak shipping months October- January peak had an effect on exports.

Indonesia : Robusta sumatra premiums slipped to their lowest since March as more beans entered the physical market ahead of the peak of the harvest, which give buying interest from foreign roasters.

India: Coffee prices rose in the auction held on Thursday as there is a higher demand from exporters and local traders as well for Robusta and Arabica, said reuters

Vietnam : Farmers were slowing sales due to thin stocks and in case of further prices gains, causing the highest price in nearly seven month trade, despite forecast of big harvest, said Reuters.

ICO: Estimates 2011 global consumption grew 1.7 %, reaching 137.9 million bags, compared to the previous year, but growth is still below the 12 year average rate. Data from some important markets show significant decrease in some markets in Southern Europe as in Spain and Italy which were affected by a combination of higher retail prices and macroeconomic turbulence