COFFEE WORLD ■ 27
C&CI
Arabica shortage likely
With coffee futures
failing to reflect
March 2010
tightness in the physical
to lead to price hike
markets, and with stock
levels continuing to fall,
commodities experts at
NY Arabica prices fell below their recent trading range early in 2010
Macquarie Bank say
they expect that the ‘C’
price will have to rise
before long, despite
recent volatility
length accounted for between 20 per
cent and 28 per cent of total open inter-
est in the past few months, while the
equivalent for index traders was a sub-
stantial 50-65 per cent. Data from the
I
n its latest Agrimarkets Comment,
Macro-economic
CFTC were not available for the end-
published in early February,
influences
January period at the time of writing, but
Macquarie noted that the New York were expected to show that selling had
coffee ‘C’ futures contract - the interna- Does this signal the end of the upward pushed prices lower.
tional benchmark for Arabicas – had trending range? asked Macquarie. "In our
seen prices fall to a two-and-a-half view," said the commodities specialist,
Real weakens
month low, and that over the past six "there are several factors at play here
months, prices have been oscillating that are driving short-term prices, none of As Macquarie also noted, the Brazilian
within a wide but generally upward which reflect true market fundamentals." Real has been weakening lately, and
trending range. In Macquarie’s view, prices are react- this has encouraged some origin sell-
"Every few weeks, after reaching a ing to the broader macro-economic influ- ing, as exporters in Brazil reap better
short-term peak, prices have drifted ences, which for the time being have export prices. While New York prices
lower, but each time have formed higher made investors jittery and more risk- may have fallen 7 per cent since 11
lows than the last," said Macquarie, not- averse – and the latest pullback from January, Brazil’s currency weakened by
ing that the latest ‘mini cycle,’ had, how- commodities has not left the coffee mar- 8 per cent over the same period.
ever, seen both a lower peak (144c/lb ket unscathed. Linked to this is the strengthening of
compared with the mid-December peak The New York ICE contract is heavily the Dollar, which being inversely related
of 148c/lb), as well as a lower low of influenced by index traders and non- to commodity prices has been a major
132.6c/lb, compared with the previous commercial traders, as depicted in the contributor to the Fund sell-off and the
135.9c/lb low at the end of December. figure shown here. Speculators’ net associated fall in coffee prices. The rela-
Futures prices are closely aligned to speculation Index traders account for over half of total open interest in New York
coffee futures and options
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