Increase in coffee prices in technical-based international markets pushed prices in the fundamentals-based local coffee auctions last week.
Prices at New York's CSCE and London's Liffe went up steadily, driven by the entry of cash-rich funds. New York, which closed last Thursday at 124 cents/lb, gained by over 8 cents to close this Thursday at 132 c/lb.
London markets saw a lot more volatility last week with gains of $75 and a loss of $42 on successive trading days. Liffe closed the week at $1669/per metric tonne (pmt) compared with $1600/pmt last week, after touching a high of $1700/pmt on Monday.
Prices at Cofei followed the global trends, closing at Rs 108 for Arabicas and Rs 74.75 for Robustas last week, compared with Rs 102 and Rs 71 the week before.
Cofei traded 516 lots (600 kg each), averaging over 100 lots a day.
Prices are expected to rise this week at the international markets, though a correction, read fall, is expected.
The rise in prices at the highly sophisticated international markets is not an indication of market perception of quantity shortfall or any other physical parameter. "The international markets have gone beyond such parameters. They are driven by the huge international funds that buy and sell based on their calculations alone," said a leading exporter.
Robustas, which have been lending respectability to quantity sold percentages at ICTA auctions for the past month, have become interesting again. Prices of Robustas are likely to go up further this week, as there is a perception, especially among exporters, that there will be a shortage in the year end. But, there are reports that Vietnam and Uganda are offering Robustas at much cheaper rates, and this could push down Indian Robusta prices.
The Brazilian government's finance scheme has made it possible for producers to hold back their 80 million bag stock. This could be a fundamental point that could push prices up at New York next week. CSCE has also decertified, ie released, stocks for September delivery, which could again push up prices in the coming week.
In the ICTA auction Robustas were in high demand and prices went up, from last auction, by more than Rs 3 for prime grades. Out the total 245.9 tonnes sold at the auction, 144.5 tonnes were Robustas.
In Arabicas, price went up even higher, and plant A sold for Rs 109, compared to Rs 102 last week. Prime grades were sought after by exporters, and other grades by local roasters.
Local roasters are set to cut prices of pure filter coffee powder to Rs 170 from the existing Rs 190. They had decided to do so as the international prices were low a while ago. But, with prices rising, they may want to raise prices again. Market analysts feel that prices are, even after the cut, higher. They put the right price at Rs 140 a kg. Next week's auction should see more demand for Robustas than Arabicas, and prices are expected to be marginally higher. Indian markets are driven by the international prices and, prices at Cofei and ICTA auctions are bound to go up, if only marginally.
