Coffee seen steady on firm overseas prices

Firm overseas prices amid slack domestic demand is expected to keep local arabica and robusta coffee prices steady in the week ahead, traders and analysts said on Wednesday.

Demand for coffee in Indian markets is likely to be subdued mainly because the season is coming to a close and new crop arrivals would commence only in December.

In the international markets, prices are seen moving up as weather concerns in coffee-growing countries continue to lend bullishness. On the London International Financial Futures Exchange, January robusta may continue its upward movement fuelled by worries about the weather in Vietnam, analysts said.

Arabica prices on the Intercontinental Exchange Futures US for December delivery are expected to move sideways with a mild upward bias, they said.

Demand for Indian coffee has petered out as local prices have been quoting above international rates, analysts said."This time there was no demand for Diwali. Usually, there is some buying ahead of the festival," said A.N. Devraj, proprietor, Sarathy Curing Works.

The Diwali festival falls on Friday.

Also, the Indian Coffee Trade Association may not hold an auction this week on account of Diwali.

"Arabica stocks are nearly to end but plenty of robusta coffee stocks are still left with growers. So it is unlikely prices would move up," Devraj said.

Demand from exporters is also absent ahead of new crop arrivals, which are likely to commence from December. India's coffee production in 2007-08 (Oct-Sep) is likely to be lower than the initial estimate of 291,000 tn by the Coffee Board of India, following heavy rains and incidence of white stem borer disease.

Coffee prices are likely to remain bullish in the week ahead mainly because of worries caused by erratic weather in some of the coffee-growing areas, said Chowda Reddy, research analyst, Karvy Comtrade. Brazil, the world's largest producer and exporter of coffee, received some rains but they are not adequate for the crop.

Vietnam, the world's largest producer of robusta coffee, also faced weather problems.

Buying has resumed after the recent liquidation by funds and is likely to continue, analysts said.

December arabica on the ICE is seen moving in the range of $1.18-$1.24 (Rs 46-49 ) this week on mild demand.

On Monday, December arabica coffee on the ICE ended at $1.1995 (Rs 47.15 rupees) per 1 pound, up 1.05 cents from Friday.

"LIFFE is more bullish than ICE. LIFFE January contract may find support at $1,890 a tonne (Rs 74,239 rupees) and immediate resistance at $1,960 a tonne (Rs 76,989 rupees)," Reddy said.