Rabobank International raised price forecasts for robusta coffee traded in London for the rest of this year on falling European stockpiles and steady demand.
The beans, used in instant coffee and espresso, will average $1,950 a metric ton in the second quarter and $1,850 a ton in the following three months, up from respective prior forecasts of $1,750 and $1,650, the bank said in a monthly report e-mailed today. Rabobank raised its estimate for the fourth-quarter average to $1,800 a ton from $1,600.
“The Liffe price forecast was increased as falling European stocks and strong demand for robusta globally have moderated the impacts of a record 2011-12 Vietnamese crop,” London-based analyst Keith Flury said in the report.
Robusta stockpiles with valid certificates in warehouses monitored by NYSE Liffe came to 181,730 tons as of April 16, down 3.6 percent from two weeks earlier, exchange figures show. Inventories have been falling since reaching a record 417,420 tons on July 11. Vietnam will produce a record 22.1 million bags of coffee in 2011-12, according to Volcafe, a unit of commodities trader ED&F Man Holdings Ltd.
“Roasters and end-users in Europe have likely run-down robusta coverage on expectations of lower prices after the 2011- 12 Vietnamese harvest,” Flury said. “The unsupplied demand remains the bullish force that has supported the London market.”
Robusta coffee has risen 10 percent this year on NSYE Liffe in London as farmers in Vietnam held back beans after prices fell 14 percent in 2011. Farmer selling in Vietnam is likely to climb as supplies gain with the start of harvests in Brazil, Indonesia and Africa, Flury said. Brazil is the second-largest robusta producer and Indonesia ranks third.
Raw sugar traded in New York will average 22 cents a pound in the second quarter, down from a previous estimate of 23 cents, as supplies outpace demand, according to the report. The global sugar surplus will be 6.9 million tons, the biggest in six seasons, Rabobank estimated.
Millers in India, the world’s second-largest producer after Brazil, owed farmers almost $2 billion in cane repayments as of mid-April, the bank said. The arrears are unlikely to reduce the planted area next season, it said.
Global cocoa supplies will outpace demand by 14,000 tons in the 2011-12 season started in October, Rabobank said, reversing a previous forecast for a shortage of 40,000 tons.
Cocoa will average 1,575 pounds ($2,558) a ton in London in the second quarter and 1,650 pounds in the following three months, below respective prior forecasts of 1,650 pounds and 1,700 pounds, according to the report. The beans will average 1,750 pounds in the fourth quarter, up from 1,650 pounds previously, the bank said.
“The global cocoa market is undervalued along the curve through 2012-13 in our view as demand growth is strong,” Flury said. “Ivory Coast’s forward selling scheme has increased the likelihood of disruptions and could result in lower-quality beans and a delay in shipments.”
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