Coffee prices in Asia were mostly lower in the week to Friday due to a broad-based selloff in commodities markets and profit-taking by speculators who had built up large net long positions in coffee futures in the preceding months.
However, prices are expected to rebound in the coming months with support from tightness in global inventories and healthy export demand, trading executives said.
Arabica coffee futures for July delivery on the Intercontinental Exchange settled at $2.6370 a pound Thursday, down 4.1% from a week earlier.
The July robusta futures contract on the London International Financial Futures Exchange, however, rose 1.5% over the week to close Thursday at $2,549 a metric ton, staying relatively immune to the slump in arabica prices as some commercial buying continued.
ICE coffee is down almost 15% from the 34-year peak of $3.0890 a pound it reached on May 3.
Though prices have eased somewhat from the highs, they have found "strong industry support near the $2.70/pound level as expectations of tight supplies in the coming season and concerns of further rallies encouraged roasters to buy...Due to the anticipated deficit in the coming season, we see prices remaining at historic levels for the next year out, and high upside risks given low stocks," Rabobank said Thursday.
There is still a good chance that prices could head back up above $3.00/lb in a few months as global output is forecast to fall and consumption is rising, Macquarie said in a research note recently.
In Vietnam, the top supplier of robusta, exports are expected to slow after rapid shipments earlier in the season, the bank said.
Domestic prices have come off their earlier peak around VND50,000 a kilogram but are still hovering in the VND48,000-VND49,000/kg range as there's very little coffee left, a trader in Singapore said.
Output is also expected to fall in Indonesia, another major robusta supplier, due to rainy weather, and that would further tighten the robusta market, the trader said.
Robusta beans, which were offered at a premium of $60-75/ton to London's July contract last week, are now being offered at a premium of $80/ton in Indonesia, he said.
In India, Asia's third-largest producer, arabica plantation bean prices fell by $160/ton from a week earlier to around $6,300/tonk a trading executive in Bangalore said.
However, robusta prices were steady with robusta cherry AB beans quoted at $2,600/ton. Prices moved mostly in tandem with international futures prices, he said.
The country has already exported around 165,000 metric tons this year, close to 60% of its harvest, due to firm overseas demand, he said.
But shipments are likely to slow in the coming weeks as the bulk of the coffee has been exported, he said.
Some growers are also holding onto stocks that they'll begin selling once prices start to climb again, he added.
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(Source: http://www.coffeeasean.org/details.asp?Object=5&news_ID=20579309)
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