Friday, 13 March 2015 20:02
HAMBURG: Low producer selling as coffee futures plunged, coupled with a weaker euro making imports more expensive, cut trade in Europe’s cash coffee market this week, traders said on Friday.
“Producers in Brazil, Vietnam and other major exporters are not willing to sell as futures fell and producers raised their price differentials this week,” one European trader said.
“But the euro’s collapse in value still made purchases more expensive in real terms for most European roasters despite low futures.”
New York arabica coffee futures fell 4 percent on Monday, heading toward a 13-month low on speculative selling as Brazil’s currency continued to weaken.
Robusta futures touched 13-month lows on Thursday on fund and technical selling. European differentials for physical deliveries strengthened as sellers sought compensation for falling futures. On Friday, Brazil MTGBF fine cup beans for April onwards shipment were at a differential of 4 cents under nearby New York arabica futures compared with 7 cents under last week.
Colombia Excelso for May onwards shipping was at 10 cents over New York against 9 cents over last week.
“The coffee flow from Colombia hardly exists,” one trader said. Some buying interest was noted for beans from Honduras, but increased differentials requested by exporters put a brake on business. Honduras High Grown beans for April onwards shipment were at 4 cents over New York against 3 cents over last week.
Some purchase interest was also seen in African arabicas still offered at relatively attractive differentials compared to other origins, traders said.
Ethiopia Djimmah Grade 5 for April/May onwards shipment was at 6 cents under New York against 10 cents under last week, with market talk that Ethiopian authorities were urging exporters to make some sales to prevent disruption to the country’s dollar-based earnings.
In robusta, Vietnam Grade 2 for April/May onwards shipment was at $ 70 over nearby London robusta futures against $ 20 over last week and $ 30 under in late February, as sellers refused to accept falling outright prices caused by lower futures.
The main trades reported in Europe during the week focused on short-covering for spot and afloat supplies of a range of origins, traders said.
“The market got so difficult that late in the week some European roasters were no longer negotiating on differentials, just asking how much coffee they could get for a set amount in euros,” a trader said.
Copyright Reuters, 2015
