By Lee J. Miller
July 31 (Bloomberg) -- Coffee prices are set to rise as El Nino-linked weather may reduce crops in Vietnam and Indonesia and on stockpiling by Brazil, according to Commerzbank AG.
The CHART OF THE DAY shows coffee inventories and arabica and robusta prices, based on data compiled by Bloomberg and IntercontinentalExchange Inc. Robusta has gained about 15 percent since falling to the lowest close in at least 18 months on June 26, and arabica has increased about nine percent from a three-month closing low July 10 as stockpiles dropped.
“ICE inventories have declined to the lowest level in nearly three years and indicate an ongoing shortage,” Eugen Weinberg, senior commodity analyst at Commerzbank in Frankfurt, said in an e-mail. “Supply in Vietnam and Indonesia, which account for more than 50 percent of the global robusta coffee production, could potentially be threatened by the weather phenomenon El Nino,” a periodic warming of the ocean surface off the western coast of South America.
Stockpiling by Brazil, the top producer, with its crop of mainly arabica beans, will also boost prices, he said. The government bought about 3 million 60-kilogram bags from domestic growers this month “to achieve higher prices,” he said.
Even with recent gains, “we still view coffee prices as too low and expect, in view of the tight market situation, significantly higher prices in the medium- to long-term,” he said. “Previously speculators’ bets on large coffee crops have put prices under strong pressure,”
Prices will probably rise based on crop forecasts and stockpiling by governments of leading producers, Luong Van Tu, chairman of the Vietnam Cocoa and Coffee Association, said in a telephone interview this week.
(To save a copy of the chart, click here.)
With assistance from Nguyen Dieu Tu Uyen in Ho Chi Minh City. Editors: Wendy Pugh, James Poole
To contact the reporters for this story: Lee J. Miller in Bangkok at lmiller@bloomberg.net
Posts
No comments:
Post a Comment