Commodity Blog

Commodity Prices – Coffee

Coffee futures retreated on outlook for growing global supply. Concerns about the situation in Europe also weighed down on commodities.

The International Coffee Organization increased its forecast for the world coffee production by 3.8 million bags from December to 132.4 million bags in the season that started in October. Analysts say that short sellers drive the market now, while buyers perhaps expect prices to fall further.

Greece is talking with private creditors in an attempt to convince them to write off part of the country’s debt. Initially, the talks improved mood of traders, boosting commodities, but the optimism started to wear off as market participants began to doubt success of the discussions.

Coffee price went down from $2.2390 to $2.2000 per pound yesterday on ICE after reaching earlier $2.1785 — the lowest level since January 9.

Corn and soybeans gained on the concerns about the adverse weather in Argentina and Brazil. Forecasters said that hot, dry weather may hurt crops in the South African countries. Corn climbed from $5.7825 to close at $5.8275 per bushel on CBoT. Soybeans advanced from $11.1225 to $11.2975 per bushel.

Coffee fell as inventories grew. ICE-monitored stockpiles rose for the fifth consecutive week and have increased 20 percent since November 1. The prices may still rebound as the forecast of the US Department of Agriculture showed that the balance of supply and demand may result in deficit. Coffee prices declined from $2.1340 to $2.1095 per pound on ICE.

Coffee fell on the sign of falling demand. At the same time, supply increased and the ICE-monitored inventories posted the first weekly gain since October 2008, rising 1.2 percent in April. Rodrigo Costa, vice-president of institutional sales at Newedge said that the prices, offered by exporters for mild-bean, were the lowest in about three years. Contract for delivery of Arabica coffee in July fell $0.007 (0.2 percent) to $2.8755 per pound by 14:00 on ICE. Prices slipped 4.1 percent this week.

Silver ended this week posting the 27 percent drop, the biggest weekly decline since at least 1975. On the other hand, gold rebounded, ending three days of losses. The difference between the performance of the yellow metal and the white metal can be explained by the higher margin requirements for silver futures on COMEX. Futures for delivery of silver in July dropped $0.953 (2.6 percent) to $35.287 per ounce as of 14:11 on COMEX. June futures for gold delivery gained $10.20 (0.7 percent) to $1,491.60 per ounce.

Sugar prices fell to the lowest level since September as specialists forecast that exports from Thailand, second biggest shipper in the world, will increase. Cocoa and coffee also fell.

Thailand may export 7 million metric tons of sugar this season, and that would be a record. Analysts are afraid that surge of exports can create oversupply on the global markets.

At the same time, demand for the sweetener may decline as Asian countries are expected to slow their economic growth. India and Brazil signaled that they are considering another round of interest rate increases, while China continues its attempts to rein the rapidly growing inflation.

July for raw sugar delivery fell as much as $0.007 (3.2 percent) to $0.2135 per pound by 14:00 on ICE, following the drop to $0.2133, the lowest price since Sept. 10. Futures on raw sugar lost 34 percent this year.

July contract for cocoa delivery slipped $60 (1.8 percent) to $3,211 per metric ton at 11:58. Futures on Arabica coffee for delivery in July dropped $0.1165 (3.8 percent) to $2.945 per pound.

Crude oil jumped to the highest level in two years after same-store sales in the US rose 4.2 percent last week. Oil also advanced as the Standard & Poor’s 500 Index went up. February delivery for crude oil rose $0.45 to $89.82 per barrel on NYMEX, the highest level since October 7th, 2008.

Concerns about tighter supply from Brazil boosted sugar prices. Adverse weather in Brazil helped the prices to jump 23 percent this year. March delivery for raw sugar gained $0.0006 (0.2 percent) to $0.3302 per pound by 13:46 on ICE.

Coffee futures also continued the rally to the 13-year record on speculation that adverse weather in Brazil and India may curb supplies. Commodities, including coffee, also gained on a weaker dollar. March delivery for Arabica coffee advanced $0.092 (4.1 percent) to $2.3385 per pound as of 14:00 ICE.

Wheat reached the highest level in four weeks today on speculation that global supplies is shrinking. Analysts estimated before the government report tomorrow that US supplies of wheat will total 173.53 million metric tons on May 31st, 0.6 percent less than predicted in October. December futures for wheat delivery gained $0.075 (1 percent) to $7.3625 per bushel by 13:15 on CBoT.

Arabica coffee jumped to the highest level in 13 years today on forecast that excessive rains may disrupt supplies from Vietnam. Global output may also decline because of smaller harvest in Brazil, biggest grower in the world. December delivery for Arabica coffee rose $0.0295 (1.4 percent) to $2.081 per pound as of 14:00 on ICE.

Cotton advanced to a record for a fifth consecutive session after output in China declined, causing speculation that it’ll increase imports and that’ll put strain on global stockpiles. Output in China may decline 5 percent in the year beginning September 1st because of natural disasters. December delivery for cotton went up $0.04 (2.8 percent) to the record of $1.4623 per pound at 14:25 on ICE.

Coffee gained today on concerns that stockpiles in Vietnam are running short and production in Columbia may dwindle. Vietnam, the largest grower of Robusta coffee, has less than 500,000 bags of unsold coffee before the new harvest, while inventories had somewhere between 2 million and 2.5 million bags in the same period last year. Output in Columbia, the second-largest producer of Arabica coffee in the world, may decrease in the next year because of excessive rains and a fungus that harms plants. January delivery for Robusta coffee rose $38 (2.3 percent) to $1,718 per metric ton as of 12:52 on NYSE Liffe. December delivery for Arabica coffee went up $0.006 (0.3 percent) to $1.862 per pound on ICE.

White sugar also rose today on speculation that Russia may increase its imports of the sweetener. Russia’s imports of raw sugar may jump as much as 300,000 tons before end of this year. December delivery for white sugar gained $2.70 (0.4 percent) to $698 per ton on NYSE Liffe.

Hogs futures slipped today on forecast that high US pork prices may diminish retail demand. Meatpackers shipped 9.215 million pounds of pork last week, the worst week since late June. October futures for hog settlement slid $0.003 (0.4 percent) to $0.793 per pound at 9:42 on CME.

Raw sugar experienced a strongest decrease in almost two moths on speculation that supplies from Brazil and India, the world’s largest producers, would increase, erasing the global deficit. Production in Brazil’s Center South increased by 26 percent in the first half of July, while cane planting in India was boosted by rains, which were 2.5 percent above the 50-year average in July. October delivery for raw sugar slumped $0.0079 (4.1 percent) to $0.1861 per pound by 9:45 on ICE.

Coffee futures dropped the most in two weeks on speculation that the commodity rallied too much, considering the anticipated high supplies from Brazil, the biggest producer. Global coffee production may grow 12 percent to 135 million bags in the year starting October 1st. September delivery for Arabica coffee slid $0.0475 (2.8 percent) to $1.6775 per pound as of 10:04 on ICE.

Coffee price jumped today as the weak dollar increased appeal of some commodities. The greenback slid 1 percent against the basket of six major currencies today. Analysts say that in case the futures would break the $1.70 level, the price would go up. September delivery for Arabica coffee gained $0.037 (2.2 percent) to $1.686 per pound as of 9:28 on ICE Futures U.S. in New York.

Cattle futures extended this month’s rally, climbing today to the highest level in eight weeks, on forecast that demand for beef exports from the U.S. would increase after the dollar dropped. Beef exports from the U.S. rose as much as 27 percent in May to 203.55 million pounds compared to 160.46 million in the previous year. October futures for cattle delivery rose $0.00375 (0.4 percent) to $0.93775 per pound by 10:59 on CME.

Arabica coffee climbed to the weekly high level today amid speculations that supplies would decline. Inventories tracked by ICE sank 29 percent this year to the lowest level since August 2002 as of July 7th. Global exports will be below last year’s forecast of 95.5 million bags (1 bag equals 60 kilograms or 132 pounds). September delivery for Arabica coffee gained $0.024 (1.5 percent) to $1.645 per pound at 10:01 on ICE.

Cattle futures dropped today on expectation that outdoor grilling in the U.S. would decline because of jot weather, diminishing demand for beef. Prices also may slump as investors liquidate positions after the three-day rally. Prices were rising throughout this year partly because of growing demand for beef. August futures for cattle delivery dropped $0.004 (0.4 percent) to $0.905 per pound as of 10:47 on CME.