Robusta coffee prices eased as Vietnam, the biggest producer
of the bean, forecast exports this month above market expectations, chiming
with ideas from brokers of a squeeze on supplies not lasting for long.
Vietnam should export 120,000 tonnes (2.0m bags) of coffee
overall this month, the country's official statistics office said.
While sharply lower, by 26%, than shipments in December last
year, the figure is above the 100,000 tonnes that traders have forecast.
It would also represent some recovery in shipments from
November, when they came in at 80,000 tonnes, and tally with expectations that
Vietnam's producers, completing a record harvest, will not for long be able to
maintain the market discipline which drove futures to a three-month high of
$1,860 a tonne, January basis, earlier this month.
The rally has been supported by a tumble in stocks of robusta
beans certified for delivery against London futures, a decline fuelled by weak
Certified inventories as of December 9 were 31,420 tonnes,
down 30% in two weeks, and at their lowest since February 2009.
However, many analysts have cautioned that such a squeeze
may prove short-lived, and that prices are poised to fall.
Commerzbank which cautioned two weeks ago that it was "only
a question of time before the expectation of higher exports would prevail on
"We can therefore expect to see lower robusta coffee prices
over the next few months, partly because the arabica market is likewise amply
supplied," said the bank, which estimates Vietnamese production at 30m tonnes.
Last week, Macquarie, which forecasts the Vietnamese coffee
harvest at 29m tonnes, including 600,000 tonnes of arabica beans, forecast a "sharp
robusta prices sell off" as the bumper crop reaches the market, and given a
diminished arabica-robusta spread.
The arabica premium fell as low as 26 cents a pound this
month, from an average of 84 cents a pound last year and 43 cents a pound
earlier this year.
"At these narrower spreads, the potential for switching
grows – especially for marginal roasters who can afford to compromise blends
and/or taste - by moving away from hard-to-find robustas and replacing it with
cheap, lower grade arabica," Macquarie analyst Kona Haque said.
In Brazil, the Conselho Nacional do Café noted talk that Vietnamese
producers "sold 10-12% of the crop in the last week. and expectations are that
marketing will reach 30% of the crop before the new year's holiday in Asian
country", in late January.
Robusta for March delivery closed 0.8% down at $1,691 a
tonne in London, which operated a half day. That price is equivalent to about 77
cents per pound.
In New York, arabica beans for March dropped 0.9% to 114.75 cents a pound.