European cash coffee market sees bargain hunting

Europe's physical coffee market saw active purchasing of a range of origins this week as roasters sought to benefit from dips in New York prices, but business in the key exporters Brazil and Vietnam remained slack, traders said on Friday.
"New York futures remained rangebound this week, but during dips there were outright offers which were interesting from a range of origins which roasters hedged on the futures market," one trader said.
Traders said European industry arabica purchase interest was focused on deferred deliveries between July-September this year rather than forward. Some Central Am Business was said to be largely restricted to relatively small fill-in supplies for nearby delivery.
The strength of the Brazilian currency, the real, was regarded as a major factor why Brazilian suppliers were unwilling to move in price negotiations, traders said. "I think we would see considerably more willingness to sell in Brazil if the dollar was stronger," a trader said. Roaster purchase interest for June/July shipment was seen for Central American beans, especially from Guatemala, Honduras and Nicaragua.
Some purchasing took place but Central American exporters appeared well sold for nearby shipments, which restrained volumes. Guatemala, especially, was demanding high differentials, which were rejected by roasters.
Sales offers of Colombian coffee were slack and differentials firm apparently because of poor weather which has slowed the country's crop. Roaster purchase interest was visible and some were accepting higher differentials. Robusta business remained difficult as Vietnamese sellers were willing to deal in deferred positions sought by European roasters, traders said.
"There is continued European industry purchase interest in robusta for delivery between September and December this year," a trader said. "I have the impression that industry has sufficient robusta cover for this year up to August." "The Vietnamese still seem to have a lot of coffee but they are highly disciplined sellers. Talk is that a lot of Vietnamese farmers and trade speculators are holding large volumes of coffee and are hoping to sell into another fund-driven rise in the London robusta market."
Indonesia's robusta crop is apparently much larger than last year's weather-damaged harvest and differentials are now closely towards Vietnamese robusta. In past months Indonesian robusta has been considerably more expensive than Vietnamese beans.
"Indonesian suppliers have been compelled to make concessions on prices," a trader said. "European industry did make some purchases this week but not at such a large level as last week." "There has been a something of transfer of European interest to Indonesia, with sorts in Vietnam being changed for Indonesian supplies."