Robusta Coffee Hits 9-Month Low on Bumper Vietnam Crop

on Nov 7, 2012
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**Robusta Coffee Futures Hit Lowest Since February**

Robusta coffee fell to a nine-month low weighed down by the prospect of a stronger harvest in the leading exporter of the bean, Vietnam, The Financial Times reported on 6 November 2012. On Tuesday, the Robusta coffee contract for January delivery on NYSE Liffe fell to $1,914 a tonne — the lowest level since February this year — before trading at $1,921, down 1.6 per cent.

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Analyst at CoffeeNetwork, part of INTL FCStone, Andrea Thompson, said: “We came down through the $2,000 level because of the Vietnamese crop. There is technical pressure because the fundamentals have been factored in to a degree.”
Since May, the lower-quality coffee bean has been trading between $2,000 and $2,200 a tonne, but Vietnam’s crop figures released earlier this week pushed the price below that range. According to traders, the recent Vietnamese data shows that the country’s exports were higher than expected, which prompted widespread selling as speculative investors created bearish positions and those who held bullish positions liquidated their holdings. Meanwhile, coffee roasters, who are usually buyers at lower levels, had already bought the amounts they needed and were absent from the market, brokers said.

**Analysts’ Expectations**
Many analysts and traders expect the 2012/13 Robusta coffee crop from Vietnam to be almost as bumper as in the previous harvest season, which due to favourable weather conditions is estimated at around 1.6 million tonnes. Despite the general forecast, Alex Parry, a broker at Dutch state-owned bank ABN Amro, said that selling from Vietnamese producers was likely to be limited at current levels over the next month as the farmers were reasonably well financed and would be disciplined and patient sellers.

!m[](/uploads/story/742/thumbs/pic1_inline.png)According to him, there will not be “a massive downside to London”, adding that investor appetite to hold bearish positions was limited.
**Arabica Coffee Futures Remain Choppy**
While Robusta dropped to a nine-month low on Tuesday, in New York the price of the higher-quality coffee bean, Arabica, rose to $1.5590 a pound. Since June when front-month futures fell to a two-year low of $1.4820, Arabica coffee prices have been drifting lower. Yet according to some analysts, selling pressure from Brazil, the main producer of Arabica coffee beans, had been easing and the market may find support around current levels.

Senior commodity analyst at Rabobank in London, Keith Flury, said: “The Brazilian government is subsidising storage and farmers and co-ops are well capitalised.” He added that this means that selling pressure was limited when prices declined.
In September, Arabica coffee exports from Brazil were down 22 per cent from the same period in 2011. Traders are now keeping an eye on the weather in the top-grower Brazil’s south-eastern coffee belt, where excessive rainfall is expected to take a toll on crops.
**Cocoa and Sugar Rise**
Amongst other soft commodities, cocoa and sugar rose on Tuesday. ICE December cocoa gained $18, or 0.7 per cent, to settle at $2,462 a tonne. Dealers continued to keep a close watch on the outlook for the main cocoa crops in West Africa, with drier weather expected to reduce the threat posed by black pod disease.
Meanwhile, December white sugar futures on Liffe rose $3.80, or 0.7 per cent, to close at $541.40 a tonne. Buyers from the Middle East have been chasing white sugar from India and Pakistan for nearby shipment, but Thai raw premiums slipped as the new harvest approached and more sweeteners from Brazil entered the market, dealers said.

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