Coffee Reaches One-Month High on Supply-Curb Signal
Comment of the Day

July 09 2013

Commentary by Eoin Treacy

Coffee Reaches One-Month High on Supply-Curb Signal

This article by Isis Almeida for Bloomberg may be of interest to subscribers. Here is a section
Robusta coffee rose to a one-month high on speculation supplies will be curbed as farmers in leading grower Vietnam hold back beans and as Ramadan's start slows sales from third-ranking Indonesia. Cocoa gained.

Coffee exports from Vietnam were probably 91,000 metric tons in June, below 141,000 tons a year earlier, the agriculture ministry estimated. Coffee deliveries from Indonesia usually accelerate before Ramadan, which starts this month. Futures for September delivery became more expensive than the November contract yesterday, a backwardation that usually signals supply concern.

“Vietnamese are likely to keep holding on to what is left of the remaining 2012-13 coffee crop, causing premiums to rise again against London futures,” Kona Haque, a London-based analyst at Macquarie Group Ltd., Australia's biggest investment bank, said in a report e-mailed today.

Eoin Treacy's view Robusta coffee trended lower between March and mid June but found support in the region of the early 2012 lows and have since rebounded. A countermanding downward dynamic will be required to question potential for a further unwind of the overextension relative to the 200-day MA.

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