02. 12. 2012

COFFEE MARKET NEWS 22nd - 26th February 2010

Figures and Statistics!

World coffee output in 2009/10 is expected to fall to 124.7 million bags from 135.1 million in 2008/09, German analyst F.O. Licht said on Tuesday. Licht said there was a long way to go for a recovery in Colombian output from the disastrous 2008/09 crop.

World coffee output will likely sit around 138 million to 140 million bags in 2010/11, Illycaffe Chairman and Chief Executive Andrea Illy told Reuters on Wednesday. Illy lowered his forecast, from his previous estimate of more than 140 million bags, due to lower production in the world's third-biggest producer in Colombia.

Global coffee consumption could reach 134 million bags in 2010, more than previously expected, the executive director of the International Coffee Organization said on Thursday. ICO chief Nestor Osorio told Reuters the organization was optimistic about coffee demand trends, given that consumption rose in 2009 despite the world economic crisis.

Futures Markets:

Arabica : Monday was a down day. Sugar, coffee and cocoa futures on ICE all eased in early trade as a stronger dollar and weaker equities weighed on oil and other commodity markets. Dealers noted continued concerns that fiscal problems in Greece could imperil the global economic recovery had made investors more risk averse, contributing to dollar gains and the setback in commodity markets. Thursday was the same again! Coffee futures settled lower after another fund related selloff across all markets. Renewed fears regarding the European sovereign debt crisis and disappointing US jobless figures led speculative funds to liquidate positions across most markets while seeking refuge in the US Dollar and treasuries. ON Friday we saw a small correction as futures partially recovered some of the previous losses but still ended the week 4.2% lower. The most active May contract gained 140 points to settle at 131.20 cents per pound. A weak US Dollar and gains in other commodity markets encouraged specs to cover some of their short positions and take profit ahead of the weekend.

Robusta : also began the week in negative mode and settled lower on Monday along with the rest of the markets. Negative technical cues and outside markets led to speculative liquidation. By Friday it was all change, as the market enjoyed an almost 2% rally after a week-long liquidation spree.

Currency :

The Euro came under pressure as economic problems in Greece continue to pre-occupy markets. The Pound too took a knock after comments from the Business Secretary Peter Mandelson that the UK would join the Euro, soon. UK GDP figures showed a contraction in the economy of 3% in 2010 further impacting the value of Sterling.

Futures and Currency close levels:

Monday

Tuesday

Wednesday

Thursday

Friday

NY May-10 c/lb

131.90 (-5.15)

132.25

132.85

129.80

131.20

Lon May-10 $/t

1263 (-40)

1264

1271

1259

1284

£/$

1.5495

1.5427

1.5396

1.5246

1.5239


Physical Markets:

Brazil : Coffee farmers in top grower Brazil might not harvest selectively despite uneven flowering in the upcoming crop, according to a senior agriculture ministry official, which could translate into reduced quality. Heavy rain in the last half of 2009 kept the upcoming crop from flowering at the same time in many areas, meaning some cherries have matured faster than others.

Colombia : With some Colombian coffee farmers struggling to stay afloat, two coffee-growing cooperatives have launched a business model to market their roasted coffee directly to buyers and improve their revenues. The trend of growers turning to roasting is no novelty in countries like Peru, Ethiopia, Guatemala, and Mexico. But it is new to Colombia, the world's No. 3 coffee exporter.

Colombia's coffee production is forecast to increase to around 5.15 million bags for the first half of the year, compared with 4.24 million bags in the same period last year, according to the National coffee federation. Colombia produced its lowest quantity in three decades 7.8 million sacks last year, after crops were hit by bad weather and a rejuvenation program temporarily took some trees out of production.

Ethiopia : Coffee shipments from Ethiopia, Africa's biggest producer, rose 12.5% to 8,342 metric tonnes last month, according to a report the Ministry of Trade and Industry. Revenues recorded a 53% increase to $29.5 million, the report said.

Kenya : Auctions continue firm with a season's record of US$ 610 / 50kgs (ex auction NOT FOB ) paid for AA!

Nepal : According to the National Tea & Coffee Development Board, the total size of Nepal's coffee cultivating area has seen a threefold increase in 10 years, with an area of 1531 hectares recorded in 2009. The export of Nepali green beans has more than doubled from 35,700kg to 88,020kg in the last year.

India : Coffee exports from India from January 1 to February 19 recorded a 42% surge to 31,538 tonnes, from 22,199 tonnes in the corresponding period last year. Earnings rose 47% to about US$75 million. Cumulative exports since October 2009 totalled 76,894 tons, worth US$172 million, up 32% in volume and 20% in value. Coffee exports are expected to reach the 2008/09 level of 197,000 tonnes this fiscal year. Industry observers say that while the previous year's crop was bad, the current year points to a return to the normal pattern.

Vietnam : saw a year-on-year climb of 3% in coffee export volume in January to 140,000 tons, according to a report from the General Statistics Office of Vietnam. However, the country earned US$ 200 million from export, down 4.7% over the same period of a year earlier. Belgium was the biggest market for Vietnamese coffee last month. Vietnam's export volume of coffee to the Belgian market stood at 28,400 tons, almost equal to the same period of 2008. Germany came second with 18,400 tons of coffee purchased from the Vietnamese market to serve its domestic industry in January.

ICO : Barclays Capital expects the coffee market will report a one million bag deficit in 2009/10, an outcome it suggests will support average prices for the ICE front month arabica contract of US$1.41 per pound over the first half of 2010.

UK : Starbucks has joined forces with Welcome Break in the UK to rebrand 29 Coffee Primo outlets over the next 16 months. The first sites to be transformed will be at Oxford Services on the M40 and Hopwood Park on the M42 and will open in time for the Easter get-away traffic.
Consuming Countries

Italians held on to their coffee drinking tradition despite economic downturn last year, with consumption stable or even slightly higher than in 2008, the head of an Italian coffee industry body said on Thursday. "Despite the crisis, coffee consumption in Italy remained stable last year, or even slightly higher (than in 2008)," Gianluigi Sora, chairman of Istituto Nazionale Espresso Italiano (INEI), told Reuters

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