Hopes that a large crop looming in top exporter Brazil will pressure prices braked buying of Brazilian arabica in Europe's cash coffee market this week, traders said on Friday. "Brazilian buying was slow this week as roasters face downward retail price pressure in much of Europe and some hope a good Brazilian crop will push futures down and so help to compensate," one cash trader said. "US buyers seemed to be more active in Brazil this week than Europeans."
Brazilian Swedish quality beans for nearby shipment were offered at 19 cents under nearby New York arabica contracts on Friday against 18 cents under last week. New York arabica coffee are currently still trading just above a 33-month low of $1.3405 per lb hit on March 18. Dealers said an anticipated record off-year crop in top producer Brazil's biennial crop cycle is offsetting concerns over coffee leaf rust disease cutting Central American output.
Fears that the roya leaf rust disease will seriously reduce the region's coffee crop this season, with Guatemala at the centre of concern, continued to underpin Central American differentials in Europe. Guatemalan SHB for nearby shipment was offered little changed on the week at 22 cents over New York on Friday. The SHB grade had been quoted at only 11 cents over New York in early January before the current crop disease scare.
"The Guatemalans themselves were holding back from selling this week as some seem to expect further rises in local prices," a trader said. "There was restrained roaster purchase interest for shipment in the second quarter of this year." More roaster buying of Honduras-origin beans was seen, partly on market talk that the roya outbreak in Peru was more serious than thought.
But good crop weather in Honduras kept a lid on differentials, with Honduras High Grown beans quoted unchanged on the week at 3 cents over New York for nearby shipments. Brisk demand was seen for Colombian milds as the country's good new mid-season crop enters the market. Colombia Excelso beans for nearby shipment were at 19 cents over New York against 18 cents over last week.
"European buyers were more aggressive this week and I saw several Colombian trades for May shipment at 19 cents over New York," a dealer said. "There were more buyers than sellers in the Colombian sector." In robustas, firm Vietnamese differentials deterred buyers, who instead turned to Indonesia, where new crop supplies are becoming more plentiful, dealers said. Vietnam Grade 2 robusta for nearby delivery was quoted unchanged on the week at $40 over London robusta futures the same as the $40 over London requested for Indonesian EK-1 beans.
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