Asian trade sees London robusta down $60 to $80

Asian trade sees London robusta down $60 to $80

SINGAPORE (Reuter): London robusta futures are seen dropping by up to US$180 later yesterday, but most Asian coffee traders canvassed said they expect it to fall by only $60-$80 and feel the market is already near its bottom.

"It's due $180 down, but I'm calling it $60 down. I don't feel it will collapse much further from here," a dealer for a commodity trading house said. "The market doesn't need any further shakeout."

Another senior dealer for a European trading house said the sharp fall in coffee prices in New York and London "shell-shocked a lot of people here. Hopefully, we can bottom out at this level."

New York arabicas plunged to a six week low on Wednesday as the July contract sank 10.30 cents to close at 207.65 U.S. cents a lb. London's key July robusta contract, on the other hand, shed $125 on the day at $1,695 a ton.

Two weeks ago, July arabicas hit a peak of 318.00 cents and London July robustas were above $2,600 a ton.

Indonesia's benchmark Grade 4 coffee, 80 defects, was quoted by the trade at $1,395/455 a ton FOB Lampung, down from the peak two weeks ago of $2,300 a ton on the same basis.

"With the threat of frost in Brazil which supported the market now seemingly discounted, the specs (speculators) are selling like crazy," one dealer said.

"Prices should run into support later in the day in London, but not at the opening," the dealer added. Another trader said current prices will be attractive for some roasters because of the prospect supplies may still be tight over the next few months.

"This is a good value to buy," the dealer said. Regional coffee dealers will continue to watch the weather in Brazil, the world's leading producer of coffee, because any sign that frost or a drought will threaten the crop can cause prices to spiral up anew.

"People will look at the weather. That's a given," a trader said.