Tag Archives: coffee bean

Demand for Indonesia Coffee Seen Subdued on Vietnamese Prices

Demand for coffee from Indonesia, the third-biggest producer of the robusta variety, is subdued as lower prices in leading grower Vietnam attract more buyers, according to Volcafe, a unit of trader ED&F Man Holdings Ltd.

While Indonesian beans for shipment in December and January are at a premium of $190 a metric ton to the futures on NYSE Liffe in London, coffee from Vietnam is at a premium of $50 a ton, data from the Winterthur, Switzerland-based trader showed. Vietnam will harvest a record 30 million bags in the 2013-14 season started Oct. 1, the trader estimated on Nov. 29.

There’s “little buying interest as buyers are focusing to buy cheaper from Vietnam,” Volcafe said in a report e-mailed today, commenting on Indonesia. “In the local market, we see only exporters cover shorts. Others are side-lined and stopped buying, they ship only the committed contracts.”

Robusta coffee futures fell 12 percent this year partly as traders anticipated a record crop in Vietnam. Supplies of the variety used in instant coffee and espresso will be 2.2 million 60-kilogram (132 pounds) bags higher than demand in the 2013-14 season that started in October in most countries, Volcafe forecasts.

Bean deliveries from farms in Indonesia were 1,500 tons this week, according to the report. Arrivals are “slightly higher” because of a bigger so-called fly crop, which usually peaks in the December to January period, the trader said. Indonesian output will be 11.2 million bags in 2013-14 compared with 11.7 million bags a year earlier, Volcafe estimates. The season in Indonesia usually starts at about April.

Bean Stockpiles

In Vietnam, coffee exports in October and November were just over 150,000 tons, down from 240,000 tons a year earlier, Volcafe said. Bean stockpiles in Ho Chi Minh City increased during both months and carryover inventories in the hands of farmers were among the highest ever, the trader added.

Lower futures this year meant farmers in the southeast Asian nation held back supplies, slowing shipments and prompting a price rally of 11 percent in November, the biggest monthly gain since 2011. Prices fell in the past two days.

“Good volumes changed hands last two days as London came down and speculators liquidated part of their positions,” Volcafe said. “We are under the impression that if we see lower prices again, we could see more coffee in the market.”

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Coffee farmers face lower earnings as global prices drop

Future coffee production in Uganda is threatened by the decline in global prices, with the prices of all four group indicators sliding rapidly over the course of November. Experts in the industry say that the low prices are likely to discourage farmers in producing countries like Uganda from investing in coffee. This scenario might lead to drop in production volumes. The indicators include: Composite Indicator, Colombian Mild’s, Brazilian Natural and Robustas. Latest statistics from the International Coffee Organisation (ICO) show that the composite indicator price averaged 107.03 US cents/ per pound in October 2013 , posting a 4.3 per cent decrease in September, its lowest level since March 2009 . Furthermore, the composite indicator is now below its level of January 2000 when the ‘coffee crisis’ started. EICO report shows: “The monthly average of the International Coffee Organisation composite indicator price now stands at its lowest level since March 2009 , and the severe downward trend observed over the last two years shows no sign of slowing.” Price movements”In many countries, the prices received by coffee growers fail to cover the unit costs of production while at the same time the prices of basic goods, such as food and energy are rising,” the ICO report notes. Experts have indicated that coffee is the worst performing agricultural commodity of the last two years, with a downward trend that has so far shown no sign of improving. ICO report notes: “All four group indicators fell sharply over the course of the month, Colombian Milds dropped by 3.4 per cent, Other Milds by 2.7 per cent and Brazilian Naturals by 2.7 per cent, to their lowest levels since December 2008 , March 2009 and July 2009 , respectively.” The most significant decline was observed in Robustas, which fell by 4.6 per cent to 83.7 US cents per pound, their lowest level in three years fell by 18.8 per cent to 5.13 US cents/ per pound, the narrowest gap in five years. This is indicative of the increased supplies coming out of Colombia compared to Central America . The arbitrage between the New York and London futures markets, on the other hand, widened by 4.6 per cent to 43.58 US cents/ per pound, but is still relatively low compared to the last four years. Uganda’s status According to a report from Uganda Coffee Development Authority (UCDA), the situation at the local scene is not different from the international table as prices have also dropped. The UCDA counter Kiboko as at last week shows that coffee was trading between Shs1,200 and Shs1,500 per Kilogramme, down from Shs2,000 to 2,300 per kilogramme it sold in October.

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