AGL 40.00 No Change ▼ 0.00 (0%)
AIRLINK 129.00 Decreased By ▼ -0.53 (-0.41%)
BOP 6.76 Increased By ▲ 0.08 (1.2%)
CNERGY 4.50 Decreased By ▼ -0.13 (-2.81%)
DCL 8.70 Decreased By ▼ -0.24 (-2.68%)
DFML 41.00 Decreased By ▼ -0.69 (-1.66%)
DGKC 81.30 Decreased By ▼ -2.47 (-2.95%)
FCCL 32.68 Decreased By ▼ -0.09 (-0.27%)
FFBL 74.25 Decreased By ▼ -1.22 (-1.62%)
FFL 11.75 Increased By ▲ 0.28 (2.44%)
HUBC 110.03 Decreased By ▼ -0.52 (-0.47%)
HUMNL 13.80 Decreased By ▼ -0.76 (-5.22%)
KEL 5.29 Decreased By ▼ -0.10 (-1.86%)
KOSM 7.63 Decreased By ▼ -0.77 (-9.17%)
MLCF 38.35 Decreased By ▼ -1.44 (-3.62%)
NBP 63.70 Increased By ▲ 3.41 (5.66%)
OGDC 194.88 Decreased By ▼ -4.78 (-2.39%)
PAEL 25.75 Decreased By ▼ -0.90 (-3.38%)
PIBTL 7.37 Decreased By ▼ -0.29 (-3.79%)
PPL 155.74 Decreased By ▼ -2.18 (-1.38%)
PRL 25.70 Decreased By ▼ -1.03 (-3.85%)
PTC 17.56 Decreased By ▼ -0.90 (-4.88%)
SEARL 78.71 Decreased By ▼ -3.73 (-4.52%)
TELE 7.88 Decreased By ▼ -0.43 (-5.17%)
TOMCL 33.61 Decreased By ▼ -0.90 (-2.61%)
TPLP 8.41 Decreased By ▼ -0.65 (-7.17%)
TREET 16.26 Decreased By ▼ -1.21 (-6.93%)
TRG 58.60 Decreased By ▼ -2.72 (-4.44%)
UNITY 27.51 Increased By ▲ 0.08 (0.29%)
WTL 1.41 Increased By ▲ 0.03 (2.17%)
BR100 10,450 Increased By 43.4 (0.42%)
BR30 31,209 Decreased By -504.2 (-1.59%)
KSE100 97,798 Increased By 469.8 (0.48%)
KSE30 30,481 Increased By 288.3 (0.95%)

Louis Dreyfus Company has offloaded the bulk of its certified robusta coffee stocks ahead of a rule change that will make it more expensive to carry the coffee forward, industry sources told Reuters. Some 59,270 tonnes of robusta coffee has changed hands in the delivery period that began at the start of this month, Intercontinental Exchange (ICE) data showed on Friday.
This is equivalent to about 76 percent of certified stocks currently held in European warehouses. Industry sources said the bulk of this was tendered on behalf of Louis Dreyfus Company (LDC), signalling that the trade house is unwinding its majority hold on certified stocks.
LDC declined to comment. Ownership of certified robusta stocks is often seen as a strategic move because it can give trade houses a bigger sway over the structure of the futures market. Four industry sources said that the key driver behind LDC's move was a looming change to exchange rules, which will add extra costs to robusta contracts from July, the next delivery period.
"Commercially, it didn't make sense to hold it," one source familiar with the matter told Reuters. "It didn't get to the point where you were even close to breaking even." The rule change is the latest in a series of reforms to the robusta contract in recent years after complaints that the exchange was failing to stop abuses such as steep rent charges and long warehouse loading delays.
Under the new rules, sellers of certified robusta stocks will have to absorb a load-out cost of about $35 a tonne, effectively making contracts from July onward "free on truck". Previously, the buyer had to cover these load-out charges if they wanted to transfer the coffee out of the warehouse.
"With the rule change, somebody is going to have to pay when they re-tender the coffee in July," one of the sources said. "There's going to be a cost associated with that." Since the start of the year, the spot May contract had mostly been at a discount of about $20-$40 relative to the July position, which partly offset the additional costs. However, a drawdown in certified stocks has helped to keep spot prices relatively firm in recent months, limiting further weakening in the spread.

Copyright Reuters, 2018

Comments

Comments are closed.