Market analysis

Last season but the coffee prices still in ‘the bottom‘
(SaigonTimeonline) - Coffee floor in London said "no" with rising Robusta prices after Scottish people say "no" with separating from this kingdom of fog. A swap between the stock market capital and goods has occurred, but this time commodity prices lossed.

Closing price movements of floor futures in London Sep 2014 (author updated)


Coffee floor becomes sacrifice


American and European leaders, especially Prime Minister of United Kingdom along with financial investors breathed a sigh of relief when Scottish people say "no" separation from Great Britain. Stock prices in Europe and the United States before the referendum day was rised strongly on Sep 18th after a endless increased chain.


S & P500 index, a key measure of the US economy has increased on Sep 17th over 2000 points. The value of shares of the French CAC also nearly hit the highest peak in 2014...


In the context of too much cluttered world: the war dragged across many countries, the Ebola epidemics can not control, the economic downturn in Europe, even the United States must continue to find their way out, then both countries as Brazil, China are having dificulties ... thought the Scots say "no" to independence will help coffee prices up. But no, coffee prices still decrease “continously”.


According to an expert on the financial markets, it is a game interchangeable flow, stock price usually rise because investors withdraw capital from commodity markets or other investment channels to purchase shares. Only cocoa escape, prices hit the highest level in over three years due to Ebola epidemic in Africa, while gold prices, especially crude oil ... and on both floor coffee robusta and arabica London New York were down sharply.


Coffee prices are "looking for the bottom"?


Indeed, right after having results from the Scottish referendum, the floor price of coffee futures in Ice Liffe London robusta on Sep 19th trade at only 1,923 dollars / ton, down from the peak of month 2114 dollars USD / ton up set up on Sep 2rd. Therefore, "close to the new season but prices keep dropping icy", Ms. Le Thi Thach, farmers in Lam Ha district, Lam Dong province, lamented. Following term prices, raw coffee prices in some areas on yesterday Sep 19th only 37.5 million VND / ton, down 4 million VND / ton compared to  the first few days of month.


London robusta futures prices last session pegged at $ 1,940 / ton, down 57 dollars / ton compared with the previous week (see chart above) and touched the lowest level from June 11th up to now.


Coffee prices in the raw materials areas of the Central Highlands this morning Sep 20th down together, only 37.3 million VND / ton, lost 1.7 million VND / ton compared with the previous week despite the purchase volume went to market not much due to low prices.


Export transactions are not very actived compare to two weeks ago because of the low future prices. Export price calculated on the difference (the differential) between the listing price and the delivery price over the rail (FOB) has also increased to 50-60 dollars / ton compared with the previous price minus 90-100 dollars / ton below the London Price.


After the "unfair" sell was aggressive on the beginning of the Sep 2014 listed price rose above 2,100 dollars / ton, sellers learn from experience to date has fallen back offer lower prices than quoted price down further, farmers did not accept to sold at low prices cause low term price and export price "subtracted back" low.


Buying and selling coffee every transaction is performed in two main contracts: the final purchase price upon signing the contract and purchase price minus or plus the next step. According to this second method, the purchaser and the seller accepts a gap between listing price and quality FOB price by the two parties agreed and the price will be agreed upon after the closing of the contract term during floor being traded. This contract is often called futures contracts (forwards contract). It is different from forward contracts (futures contract) that seller can only sell quality coffee futures by floor auction rules are allowed (tenderable) and according to the standard price set by the floor.


Robusta stockpiles rise

 Periodic report each two weeks of the London Liffe robusta Ice Robusta announce on Sep 15th inventories Robusta certified quality that enables spurt auction on the floor is 9,890 tonnes, reaches 96,930 tonnes or 1,615,500 bags (60 kg x bags), increases 29.43% over the same period last year. Expected net inventory will continue robusta increase in the coming days due to goods from bonded warehouses around HCM City to strength in recent days to give the way to new coffee crop. Especially in this increased period, the first time in the history robusta coffee of Brazil quite large about 4,370 tons, just after Vietnam is 4,600 tons, and the rest from other countries such as Indonesia, Ivory Coast...


Inventories can be certified arabica auction floor New York Ice remained high, reached 143 492 tonnes on Sep 19th


Coffee County Association of America (Green Coffee Association - GCA) reported that in Aug 2014 inventory in North America reached 6,038,503 bags, 4,161 bags decrease compared to the previous month. Inventories are excluding goods are in transit or in the factory, the amount of which approximately 1,000,000. It is estimated each week in North America consumes about 490,000 bags of coffee. With a total of over 7 million bags of coffee enough to use for more than 14 weeks if for whatever reason that is not imported.


Inventory was many in hands of consumers, over 21 million bags, is another reason make fundamental price "stay in the bottom" these days.

Expert: Nguyễn Quang Bình

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