Asian Coffee: Prices Lower, Sellers Hold Back
Asian coffee prices were mostly lower, weighed down by another week of losses on futures exchanges that kept most sellers out of the market in hopes prices would rebound.
Thursday, the March Robusta contract on the London International Financial Futures and Options Exchange ended $28 lower at $1,163 a metric ton, down $43 from a week ago. The May contract also settled $28 lower, at $1,185/ton, down $40 from a week ago.
In Vietnam and Indonesia, farmers held on to the slim supply of stocks available, keeping trading limited to activity between middlemen and trading houses.
Having sold stocks at high prices in January, Vietnamese farmers aren't under pressure to sell now that prices have sharply fallen.
That's likely to keep up until April, when farmers will need capital to fertilize and irrigate for the November crop, said a Ho Chi Minh City-based trader. So for the time being, supply is extremely tight. "It's near impossible to buy," he said. "And you can't sell because you can't buy."
Another trader said overseas roasters are unwilling to purchase at the current levels and are looking for prices to drop another $20/ton.
"They're hoping (prices) will soften once Indonesia's crop comes in, or more information on Brazil's crop comes out," said another Ho Chi Minh City-based trader. "Right now, the market is in limbo."
Offers for Robusta grade 2, 5% black and broken for March/April shipment were quoted around $1,150/ton, free-on-board Ho Chi Minh City, down from $1,160-1,185/ton last Friday.
Trading was thin in Indonesia as well, as both Robusta and Arabica are between crops and stocks are just enough to cover commitments until the harvest in April.
"There is almost no (Robusta) coffee available at the moment," said an official at a Lampung-based trading house. Robusta prices rose despite futures losses, on heavy buying from an exporter who was short and had to cover in a market with scant supply, he said.
For Arabica, the story is much the same. "There's not very much trading," said a Medan-based trader. "The prices are unstable and there's not much coffee."
Friday, offers for Robusta grade 4, 80 defects, were quoted around $1,220-$1,225/ton, FOB Lampung, compared with $1,195/ton a week earlier.
Offers for Mandheling grade 3 Arabica coffee were quoted around $3,100-$3,200/ton, FOB Medan, compared with around $3,300 last week.
In Papua New Guinea, markets were virtually at a standstill, as the country is between Arabica crops and farmers are said to have little to no stocks.
India this week bucked the trend, with brisk sales of Robusta for nearby shipment as farmers began harvesting the new crop.
Farmers decided to sell despite the fall in prices, as February and March are ideal months to sell coffee in the international market on the back of the new crop.
Overseas demand is strong as well, as buyers in Europe and Japan are keen to capitalize on the lower prices.
Robusta cherry AB, FOB Cochin, was offered around $1,350/ton, down from $1,385/ton last week. Arabica plantation A was quoted at $2,425/ton, compared with $2,530/ton last week.
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