DJ Asian Coffee Prices Elevated On Fundamentals; Futures Lower Amid Global Woes

DJ Asian Coffee Prices Elevated On Fundamentals; Futures Lower Amid Global Woes

SINGAPORE (Dow Jones)--Coffee prices in Asia were mixed but remained elevated
in the week to Friday due to supportive fundamentals, even as bellwether coffee
futures fell amid a broad selloff in commodities complex on a dim global
outlook and weak U.S. economic data.
Arabica coffee for July delivery on the IntercontinentalExchange settled at
$2.6125 a pound Thursday, down 1.6% from a week earlier and well off their
multi-year high of $3.0890/pound hit May 2.
Some traders expect arabica futures to stay in a $2.50/lb-$2.70/lb band for
the next few sessions, until fresh cues emerge from top producer Brazil, where
frost could hurt the new crop and rekindle bullish sentiment.
July robusta on the London International Financial Futures Exchange also
settled lower, falling 5% on week to close Thursday at $2,471 a metric ton, as
funds liquidated long positions following the slump in New York.
Still, underlying fundamentals remain strong, with global demand for coffee
showing little sign of abating.
World coffee exports rose 16.7% to 62.7 million 60-kilogram bags in the first
seven months of the coffee year that began October, up from 53.7 million bags a
year earlier, data from the International Coffee Organization showed Tuesday.
Exports from top robusta producer Vietnam totaled 2.4 million bags in April,
bringing its exports to 11 million bags from October-April, up 20.1% on year.
Still, exports may slow in the coming months, as stocks have been depleted,
some trading executives said. They tipped domestic prices to climb to a record
high of VND60,000 a kilogram in the coming months.
"The next Vietnamese harvest will likely hit the market only around December,
and output is just not keeping pace with demand," said a trader in Singapore.
In Indonesia, another key producer, robusta beans were being offered at a
premium of $120/ton to London's July contract compared with just over $80/ton
last week, a second trader in Singapore said.
Premiums are already quite high, given that the harvest has just started, but
they may remain elevated since there isn't enough robusta to meet roaster
demand for the next six months, he said.
In India, Asia's third-largest producer, high quality arabica plantation bean
prices were steady around $6,300/ton, as traders are holding on to coffee to
wait for prices to climb, a trading executive in Bangalore said.
However, robusta prices have eased slightly due to the fall in London
futures, he said. Robusta cherry AB beans quoted at $2,700/ton, down from
$2,725/ton last week.
Total Indian coffee shipments during the first eight months of the crop year
that began Oct. 1 rose to 247,372 tons from 171,704 tons a year earlier, data
from the state-run Coffee Board showed Wednesday.
Soaring exports have left some small-to-mid size domestic roasters worried
whether enough coffee will remain for local consumption until the new harvest
starts around December.