WEEKLY MARKET REVIEW Oct 26-Nov 1, 2007
WEEKLY MARKET REVIEW OCTOBER 26 – NOVEMBER 01, 2007 November 02,
2007
‘ROBUSTED‘
1. GENERAL
· the squeeze
at liffe is keeping a firm grip on the robusta market, preventing any
nearby business and leaving nov liffe the only buyer for graded spots.
ungradable qualities and liffe rejects instead are looking for a home but
have to be discounted by usd 300-400 to find a buyer, a really odd
situation.
· overshadowed by liffe’s hickups the ice
robusta contract continues to be almost completely ignored. close to all
fresh robusta business into next year is done against the london market as
traders stay with what they know and where the liquidity is, and
liffe’s proposed changes to the contract are encouraging.
· after a prolonged drought in brazil’s coffee areas the
weather has now turned nearly perfect for the development of the 2008/2009
crop. good rains last week, followed by dryer weather with intermittent
showers, have produced the mother of all flowerings.
·
physicals remain active, especially arabicas with the main focus on
discounted spots. forward robusta activity picking up with diffs softening
again.
· nybot certified stocks as per nov 1st: 4.555m bags (up
42.000 bags) with 100k bags pending
certification.
· we
estimate specs/funds position at nybot abt 36.000 lots net long and at
liffe about 46.000 lots net long.
· our ratio of pending
fixations industry/origin vs dec and mch: 1.3 : 1
2. PRICE COMPARISON
(all in cts/lb) change vs
technical/market comments basis
’c’ dec 07 at 122.60, liffe’ jan 08 at 1954
‘c’: market is still consolidating in the range of
120–124 held by the strong robusta market. the structure looks
negative as well as all the major indicators. stochastics look oversold
giving a mixed
impression. prices dropped below the moving averages
and with a break through the 120 support, another big move to the downside
is possible. The overall picture is negative. support: 120, 118.30,
115, 113.20. resistance: 126, 128.30, 133, 136.
‘liffe’:prices advanced strongly this week pulled along by
the squeezed nov. all indicators point higher. overall looks very positive.
support:1902, 1890, 1855, 1810. resistance: 2030, 2063, 2104.
3.
BRAZIL
· internal market: group I: volume traded this week
remained small. the strong real and a national holiday today in brazil
slowed the activity. replacement prices are unchanged and continue far from
the export levels traded. group II: little business reported as producers
are not offering big volumes.
· quiet week on the export side
as most exporters are offering swedish quality at -13/-14 for shipment
until march08 while buyers’ interest is 2 cents cheaper. some
business was reported
at -15 cents/lb for swedish for shipment
december07 and 1st half of 2008.
01.11.2007 25.10.2007
'c' dec 07
122.60 2.00
liffe jan 08 88.63 7.57
arbitrage 'c' dec 07/ liffe
jan 08 33.97 - 5.57
· according to somar, a cold front will
reach the coffee belt today bringing more widespread rain. this wet air
mass should bring rain to northern sao paulo and central south of minas
gerais until early next week.
· following other currencies
trend against dollar, real closed the week firmer again, trading between
1.73 and 1.78.
· as per cecafe preliminary report 2.5 m bags of
green coffee were shipped in october. the final number may be higher and
should be released next week. · 94.6 pct of the 50.000 bags of
yellow coffee auctioned by the government this week were sold with prices
ranging from 190 to 214 reais.
· bmf dec07: $ 153.60 (+2.05)
· arbitrage bmf/’c’ dec/mar: 10.33 ( weaker 0.40)
· exchange rate: 1.75 (re-val 2.25%)
4. COLOMBIA
· local market: heavy rains have delayed the picking process,
drying and transport and therefore
new crop arrivals are still lower
compared to other years. this results in a firm internal market, with
replacement levels at about 2 over march.
· export market:
ongoing demand for spot and afloat coffee in europe and usa partly caused
by delayed shipments from origin. roaster demand for forward shipments from
origin rather subdued.
· registrations: aug 07: 886.386 bags
(down 1pct), sept 07: 881.480 bags (up 12pct), oct 07:
943.928 bags
(up 4pct), nov 07: 560.245 (down 47pct) but still open.
·
colombian peso: the strong performance continues. this week's high 2038,
low 1978 and close at 2009.
5. MEXICO/CENTRALAMERICA
STATISTICAL
SITUATION IN MEXICO & CENTRAL AMERICA
COFFEE YEAR 2007/2008
Estimate per October 31, 2007 - all in '000 of 60-kg bags
Mexico
Costa Rica Guatemala Honduras Salvador Nicaragua Total
Carry-in 06/07:
50 50 100 70 10 70 350
Exportable crop 07/08: 2'750 1'650 3'750 3'500
1'380 1'300 14'330
Total available: 2'800 1'700 3'850 3'570 1'390
1'370 14'680
w/o sold outright: 200 750 650 250 500 250 2'600
w/o
sold unfixed: 400 50 500 400 50 150 1'550
Uncommitted per Oct 31:
2'200 900 2'700 2'920 840 970 10'530
Summary / Comparison
07/08
06/07
Total available: 14'680 13'240
w/o sold outright: 2'600 18%
1'580 12%
w/o sold unfixed: 1'550 10% 1'380 10%
Uncommitted per
Oct 31: 10'530 72% 10'280 78%
6. AFRICA/PNG
· kenya:
rather uneventful week. plantation sector started its main crop harvest
which is expected to last upto year end. industry sidelined.
·
ethiopia: few arrivals of early new crop washed readily taken by exporters,
prices very firm. sporadic sales in new crop washed and sundried, shipment
throughout 08. spots enjoy ongoing demand. agricultural ministry
forecasting a hefty production increase for 07/08, exports predicted to
reach 220.000 tons, approx 20pct above 06/07. private market participants
consider this forecast very (too) ambitious.
· tanzania: little
fresh biz reported, firm auction levels hampering forward biz.
· burundi: no samples, no news, no origin offers! smallish current
crop of some 7.000 tons probably sold/committed by now.
·
uganda: availability of new crop arabica improved somewhat, volumes remain
way below normal for this time of year. ongoing demand in drugar for
jan/feb/mch.
· png: sporadic interest in lower qualities for
nearby positions. asian industry trying to advance
shipments due to
delays from other origins. specialty industry looking at 08 positions.
7. ROBUSTAS
· liffe’s lead switch is steaming ahead
reaching a high of 440 premium. the 6.911 tenders on 1st tender day were
virtually all absorbed by one house, an obvious sign that the big long is
intent
on taking delivery of whatever is coming its way. the squeeze
will continue until the market is purged of all shorts without physical
cover.
· gradings continue to accelerate and are reaching
500-700 lots a day. total gradings since oct 1st are up to 5.881 lots and
are expected to surpass 10.000 lots before nov goes off the
board.
this means that a willing stopper may have to take in as many as 25-30.000
tenders. it’s unthinkable that anybody with coffee to tender will not
do so at the current nov premium.
· nearby business is at a
standstill whereas forward activity has picked up again as origin diffs are
under renewed pressure due to liffe’s firmness.
·
vietnam: mixed weather in the highlands allows the harvest to proceed, but
at a slow pace.
domestic market sales of new crop begin to increase,
but sellers remain disciplined due to the rising prices. differentials
weaken into the rally although there is good underlying interest for all
positions. october shipments were 70.000 mt.
· indonesia:
asalan arrivals are increasing into the market rally, with a weekly total
of abt 4.000 mt. good buying interest from all corners, i.e. exporters,
local traders, multinationals and local
industry. outside business
remained quiet with buyers’ and sellers’ ideas divergent. the
fed’s rate cut failed to boost the rupiah which weakened to
9100/9175.
· uganda: some very low grade faq arrives with the
full flow remaining elusive but should become stronger once it does kick
in. the theft of coffee in transit from kampala to mombasa is running at
unpresendented levels. total october exports are put at 172k bags.
· brazil: local industry buying low grades types 6 and 7 at prices
equivalent to liffe +7.00 cts/lb fob. export business consequently is at a
total standstill.
8. ORIGIN DIFFERENTIALS FOR JULY SHIPMENT CTS/LB
FOB
this week last week
brazil swedish crop 07/08 c - 14 c -
14
colombia excelso c + 3 c + 3
costa rica hb crop 07/08 c + 6 c
+ 7
honduras hg crop 07/08 c - 5 c - 5
kenya ab faq c + 28 c +
30
viet gr 2 (cif) liffe - 10 liffe + 10
regards, VOLCAFE
SWITZERLAND LTD