Arabica coffee is "the most undervalued" member of the soft
commodities complex, Rabobank said, forecasting a decline in prices of robusta
coffee, and downgrading forecasts for cocoa, cotton and sugar futures.
The bank raised its hopes for robusta coffee, the type
traded in London, noting the tighter-than-expected supplies of the bean which lifted
futures- briefly – to an eight-month high of $2,190 a tonne on Monday.
However, even the raised price outlook foresees a slight decline
in robusta values ahead.
Robusta supplies from exporters other than Vietnam, the top
grower, shows shipments are tailing off, "will limit prices to the upside",
Arabica coffee, the type traded in New York, looks set to regain
prominence – if not potentially for some months during pressure from the Brazilian
harvest, and while users work through hefty inventories.
'Strong into the autumn'
"We anticipate prices to be rangebound to October, between
170-185 cents a pound," Rabobank said.
"End users have not been major buyers of arabica… as most
firms made sure to have cover until the Brazilian 2012-13 crop was available.
|Rabobank third-quarter price forecasts and (change on last)|
Cocoa: $2,600 a tonne, (+$150)
Arabica coffee: 180 cents a pound, (unchanged)
Robusta coffee: $2,100 a tonne, (+$250)
Cotton: 75.0 cents a pound, (-5.0 cents)
Price for front month contract, average for quarter
However, "buying support is expected to be strong into the autumn",
as buyers prepare for the 2013-14 crop year, which will be an "off" year in
Brazil's cycle of higher and lower producing seasons.
"Our medium-term fundamental outlook suggests that arabica
prices are likely near the bottom of their range, with buying expected in the next
'Outlook remains bearish'
The comments came as Rabobank lowered its forecast for cocoa
futures, if still seeing price rises ahead as output in Ivory Coast, the top
producing county, suffers from the end of La Nina weather conditions, which promote
The bank also cut its forecasts for New York raw sugar
futures, citing world production surpluses it estimated at 8.1m tonnes in
2011-12 and 4.6m tonnes 2012-13, higher than figures from many other
commentators, including the International Sugar Organization.
"Demand for sugar has improved due to weakening international
prices, but not enough relative to the expected surplus."
The forecast for cotton futures such that a return to 70.0
cents a pound early in 2013, a level not seen since February 2010.
"The fundamental outlook remains bearish," Rabobank said.