Weekly Market Report 22 to 26 July 2013

Coffee Prices, Futures and Currency close levels:

Futures Markets:

Arabica: For a moment on Friday it seemed as if the current resistance of 126.5 might be broken.  Not so.  Pushing through this level could drive the resistance level up to 133.  Without this break-through the last week’s low of 117 could be easily surpassed and prices could continue to fall towards 100.

Robusta: A fall in certified stock of 1,750 lots took the working position to below 10,000 lots – the largest movement since December. 

Currency: FX and gold trading is currently subdued as investors await results of a key Federal Reserve policy meeting this week.  The dollar is at a one month low against the yen, and gold is at its lowest in three weeks.

Physical Markets:

Brazil: Despite forecasts of up to a third of the production in the state of Paraná being wiped out due to frosts, temperatures did not drop and it was business as usual for the heavyweight of the coffee industry.

Colombia: Coffee farmers in western Colombia have sued their own government on the grounds that importing coffee creates a national oversupply, ‘to the detriment of domestic producers and their dwindling income’.  According to the farmers, Colombia imports 80% of the lower-quality coffee used for domestic consumption.

Tanzania: Auctions will restart on August 15^th after three and half months’ break.  Africa’s 4^th largest coffee producer had a bumper crop of 70,633 MT exported in 2012/13 – the highest volumes in 20 years.

Uganda: The two coffee regions accounting for more than 55% of the country’s output have been affected by unusually hot and dry weather conditions over the past few months.  The Uganda Development Authority fears the drought will affect the growth of newly planted coffee trees and the 2013/14 total yield.

Kenya: The Kenya Coffee Producers and Traders Association is calling for a revision in the current laws which they deem to benefit the multinational traders above the coffee farmers.  They also argue that the high licensing fees prevent local entrepreneurs from flourishing.

Rwanda: Exporters are concerned an increase in export tax expected to take effect this month will hinder their ability to compete in the global market.  The proposed tax will rise from $500 to $4,500.  Local buyers who bought coffee  before the price hike are likely to have to sell at a loss.  The NAEB (National Agriculture Development Board) denies that the increase is another tax, claiming instead that it is a ‘mandatory’ charge for the increasing cost of fertilisers.