Colombian beans rose to new price highs in Europe's cash coffee market this week with some buyers not getting supplies despite willingness to pay the high cost, physical traders said on Friday. Price differentials for Colombian Excelso grades were at 90 cents over New York's ICE July contract, up eight cents on the week and up from 30 to 35 cents over New York in early March.
Colombian differentials in November 2008 were only 7.5 cents over nearby New York contracts. "The extreme shortages of Colombian coffee continued this week, there was simply not enough to meet industry demand and prices shot up again," one trader said. "There seems to be no end to it."
Colombia's coffee production has fallen due to bad weather and a short-term programme to replace old trees with new ones. But Colombia's national coffee federation said on Wednesday that the country has sufficient coffee to meet its commitments even though a scarcity of the country's mild arabica beans has driven up prices.
"Whatever the reason for the sudden rise in Colombia, industry and other market participants are not optimistic about a rapid improvement," another trader said. "European purchase offers at the amazingly high level of 90 cents over New York could not find suppliers." "So even if industry was willing to pay these prices, the highest I can remember, they still could not get Colombian coffee."
The high Colombian prices again transferred buying attention to Central American origins as Colombia replacements. Guatemala Strictly Hard Bean was up three cents on the week at 41 cents over nearby New York contracts.
"Available supplies in Central America appear to be pretty tight and regional differentials continue to receive spillover support from Colombia," a trader said. Active Brazilian business was reported after Brazilian exporters cut sales offers for the second time in two weeks. Brazil Medium to Good Bean Fine was offered at 22 cents under New York for June/July shipment against 20 cents under last week.
"I saw good industry buying of both Brazilian old and new crop shipments," a trader said. "Industry purchase interest in Brazil for first half 2010 shipments was also visible this week." Vietnamese robusta FOB differentials were weaker at $80 under nearby London against $60 to $70 under last week. Good industry purchase interest was seen largely for second-half 2009.
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