Swiss commodity trader Sucafina picked up a large chunk of robusta coffee stocks tendered on the exchange this month, sources told Reuters, despite a rule change that makes it more costly to carry the coffee forward. Some 62,670 tonnes of coffee had been tendered up until May 21, Intercontinental Exchange (ICE) data showed. This represents about 78 percent of certified stocks stored in warehouses.
Industry sources said Sucafina, one of the world's largest coffee traders, bought most of the stocks tendered against the May contract, which expires at the end of the month.
Sucafina declined to comment. Reuters previously reported Louis Dreyfus Co was the main seller of the coffee, with the rule change said to be a key driver in the decision to loosen its majority hold on stocks.
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.
However, a change to exchange rules, which will add extra costs to robusta contracts from July, has made it more expensive and less attractive to hold certified stocks. 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".
Industry sources estimated the total cost of holding the stocks from May into July - including rent and interest - at $60-70 per tonne.
Yet despite the additional costs involved in taking delivery of the May contract, sources said some of the stocks are deeply discounted Brazilian beans, which could be attractive to Sucafina's instant coffee clients.
"It's very good value - it's the cheapest coffee around," said one European source. "And the industry is not opposed to buying that coffee."
The new owners now potentially hold a bigger sway over the closely watched July/September spread, the sources said.
A drawdown in certified stocks in recent months has kept the structure of the futures market firm, with nearby positions trading flat or at a premium to forward positions.
This has mainly been due to relatively strong physical differentials in top grower Vietnam, which have made the futures market less attractive and resulted in few shipments of fresh coffee to Europe for grading onto the exchange.
If shipments don't pick up and certified stocks are not replenished soon, the premium for the July position over its September equivalent could strengthen further, sources said, giving the new owners of the stocks a distinct advantage.
"Now that they have control, they can trade around the structure with quite a lot more conviction and a lot more force," another source said.