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Europe coffee: Colombia short, alternatives sought

*Reporting by Michael Hogan; Editing by Anthony Barker
Reuters, Friday January 23 2009

HAMBURG, Jan 23 (Reuters) – Colombian beans were once more in very low supply in Europe’s cash coffee market this week and European roasters urgently sought alternative origins, traders said on Friday.

“Volumes of coffee being offered on the market from Colombia this week were once more simply insufficient to meet industry needs,” one trader said. “There was fierce competition among buyers for the few supplies made available.”

Colombian Excelso grades were traded at 26 cents above New York’s May contract , unchanged on the week but up from 20 cents just before Christmas and only 9 cents above New York in October. Traders believed Colombia was suffering from a series of problems including unfavourable weather and logistics difficulties.

“The coffee flows out of Colombia seem to be getting lower by the week,” a second trader said. “There was hardly anything available this week, even for second half 2009 shipment.” This pushed European buying interest towards Colombian replacements including from Rwanda, Uganda and Brundi.

These relatively small-volume suppliers generally trade at differentials around five cents under New York but the sudden industry interest pushed them up to level New York.

European roasters also continued to look to Central American supplies, partly as alternative to Colombia, which held differentials firm.

“There was good roaster demand for Guatemalan beans but this could not be satisfied as exporters were unwilling to sell,” the first trader said.
Costa Rican differentials were also firm and were around the same level as Guatemalan, with strictly hard bean (SHB) grades from both countries quored about 24 cents above New York’s May contract, with price support coming from the tight Colombian supplies.

Differentials for Honduran beans stayed high, with European buying interest noted for February and March shipment.

Good European purchase interest was noted in Brazil’s upcoming 2009/10 harvest.

“There are three or four large European roasters with considerable interest in getting some of Brazil’s new crop for July/September shipment in their books,” a third trader said. “But Brazilian exporters were sometimes only interested in selling old crop for nearby shipment up to July.”

“This sometimes meant business could only be done this week if roasters agreed to buy a combi-contract of both new and old crop.”
In robustas, trade was thin as leading exporter Vietnam closed down its books before Lunar New Year holidays. Vietnamese trade closes at the end of this week and is set to resume in early February.

“Strong industry demand is keeping Vietnamese differentials firm,” the first trader said. “Also hardly anything is coming out of Indonesia.”
“Indonesian roasters seemed to buy just about everything which came on their local market this week, leaving hardly anything for export.”
Indonesian EK-1 was offered at about $80 under London contracts, considerably more expensive than the $135 under London quoted for Vietnam Grade Two.

*Source: http://www.guardian.co.uk/business/feedarticle/8313532

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