Skip to main content

FCStone sees Arabica coffee rising in nine months to a year


By Isis Almeida

Bloomberg News


June 28, 2012

Arabica coffee prices will be higher in nine months to a year because of low stockpiles, spurring investors who are expecting lower prices to reverse those bets, according to INTL FCStone Ltd.

Hedge funds and other money managers were net short, or betting on lower prices, by 12,105 futures and options as of June 19, Commodity Futures Trading Commission data show. Arabica coffee prices have dropped 28 percent this year because of record production in Brazil, the world’s largest grower. Stockpiles by Sept. 30 will be 24.1 million bags, the lowest since Sept. 30. 2001, U.S. Department of Agriculture data show.

“It looks to us at this point that the short position will be covered,” Stephen Pollard, a senior vice president at INTL FCStone (Europe) Ltd., said at a conference in Geneva today. “We are really struggling to see where the sales are going to come from, who is going to sell to the funds when they start buying.”

If funds revert to the position they were at by the end of 2010, that would generate buying of 40,000 contracts, he said. That corresponds to 10 million bags of coffee, he said. World coffee output will be 148 million bags in the 2012-13 season that starts in October, the USDA forecasts.

Robusta Forecast

Robusta coffee will trade at $1,900 to $2,300 a metric ton in London for the next three months, Pollard said. The September futures contract was at $2,093 a ton at 3:21 p.m. in London.

“There is a big speculative position short arabica and long robusta in the market that will unwind,” he said. Bigger crops in Vietnam and Indonesia will limit price gains, he said.

The crop in Vietnam, the biggest robusta producer, will be 24.5 million bags, up from 20.3 million a year earlier, according to Holland Capital LLP, an agriculture investment company in London. In Indonesia, the third-biggest robusta grower, farmers will harvest 7.4 million bags of the variety in the 2012-13 season that started there in April, up 2 million bags from a year earlier, it estimated.

Robusta beans, grown mainly in Asia and parts of Africa, are used in instant drinks. Arabica, harvested mainly in Latin America, is favored by Starbucks Corp., the world’s biggest coffee shop owner.
---
To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net
To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net

Popular posts from this blog

Ethiopian Coffee & Tea Authority Relaxes Coffee Export Restrictions

  Ethiopian Coffee & Tea Authority Relaxes Coffee Export Restrictions  Addis Fortune November 14, 2020 Coffee traders can now send all grades of coffee beans to the global market, in contrast to the previous law that allowed them only to export the top four grades of coffee, according to a new directive issued by the Ethiopian Coffee & Tea Authority. Farmers and exporters can also directly ship the beans without going through the trading floors of the Ethiopian Commodity Exchange (ECX). The new scheme allows fifth grade and under grade (UG) coffee beans, which up until now have only been supplied to the local market, to be exported. Coffee quality experts at respective regional offices of the Authority will determine the grade of the coffee. The Authority at its head office issues permits to the exporters every year, while regional offices are delegated to grant export permit to farmers who have at least two hectares of farmland. The Authority sets standard prices on a...
Post a Comment
Read more

Climate-hit Ethiopia shifts coffee uphill

Caffeine high? Climate-hit Ethiopia shifts coffee uphill Elias Gebreselassie Thomson Reuters Foundation June 3, 2018 HAMBELA, Ethiopia (Thomson Reuters Foundation) - Few countries take coffee as seriously as Ethiopia - and that’s not only because it prides itself as being the source of the prized Arabica bean. But rising temperatures and worsening drought linked to climate change are now hitting production - and fixing that may require moving many Ethiopian coffee fields uphill, experts say. Aside from its cultural value, coffee is Ethiopia’s single largest source of export revenue, worth more than $860 million in the 2016-2017 production year. But coffee-growing areas in eastern Ethiopia have seen the average temperature climb 1.3 degrees Celsius (2.3 degrees Fahrenheit) over the past three decades, according to the Environment, Climate Change and Coffee Forest Forum (ECCCFF), an Ethiopian non-governmental organization. That has caused stronger drought ...
Post a Comment
Read more

The saga of the Starbucks-Ethiopia affair

Note :   The most recent developments on Starbucks vs. Ethiopia are listed below: January 9, 2012:  Has trademarking doubled Ethiopian farmers' income?   January 5, 2012:   Starbucks to showcase use of a QR code to trace Organic Ethiopia Sidamo® Coffee   ========= "When two elephants fight, it is the grass that suffers. When the same two elephants make love, the grass still suffers." - derivative of an old African saying Life, before and after the agreement, remains unaffected for farmer Gemede Robe, the icon of the Starbucks vs. Ethiopia dispute. He lives in the Borena zone of the Oromia region, one of the many coffee growing zones of the country. (Photo: Courtesy of Oxfam America) By Wondwossen Mezlekia May 31, 2010 The coffee trademark dispute between Starbucks and Ethiopia officially ended exactly three years ago. In June 2007, the giant coffee chain and the government of Ethiopia declared their agreement "to work together to license...
Read more