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A concern for the available supply of higher quality coffee from Colombia and Brazil along with talk of a flow of more money from funds to commodity markets has helped boost the market over the past few sessions. Colombia growers believe that exports of coffee for 2009 will reach just 8.1 million bags, down 27% from last year. Continued talk that the Brazil crop this year received too much rain during the normally dry harvest period which resulted in up to 40% of the crop slipping to lower quality has also helped support. As a result, the supply of higher quality coffee is tightening into 2010 as up to 3 million bags of the Brazil harvest may move into government storage. March coffee closed slightly higher on the session yesterday but well off of the highs of the day. A sharp break in the US dollar and new all-time highs in gold plus strength in the stock market helped drive the market to the highest level since November 9th but speculative buying interest slowed late in the day and many markets set back from the highs. Brazil exported 2.439 million bags of coffee in November as compared with 2.396 in October and 2.857 million bags last year. Costa Rica exports for October and November have reached just 55,007 bags, down 52% from last year’s pace. Honduras exports for the same period reached 40,873 bags, up 13% from last year. A jump in open interest to 110,355 on November 30th from 105,659 the previous session was also seen as a positive development. Coffee stocks in Japan at the end of October totaled 111,477 tonnes which is down from 123,127 in September and down from 131,542 tonnes in August. Daily ICE certified deliverable coffee stocks were down 6,703 bags to 3.174 million with 41,616 bags pending review.
TODAY’S GUIDANCE: Buying support for March coffee comes in at 141.60 and 140.55 with 147.95 and 152.10 as next upside objectives.
