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Wednesday, July 29, 1998

Asian coffee prices seen weakening 

REUTERS  
Singapore, July 28: International trading houses increased their activities marginally in Indonesia over the past week but local trading firms remained bogged down by financial problems, traders said on Tuesday.

"Some local exporters have capitalisation problems" and were unable to buy supplies from Indonesian producers, said one Singapore trader.

"International houses are slightly more active recently, but not in a big way," he added.

Overall trade was much slower than in previous years during the peak of the harvest season and traders expected prices to continue weakening due to a bearish international market and a big harvest in Brazil.

One trader said up to 50 per cent of the Indonesian coffee crop, estimated at 330,000 tonnes for this year, might have been harvested and one third exported.

"The container shortage problem is not as bad as we expected, but Chinese traders are still worried about their safety, so business has been very slow and prices are not very good," another tradersaid.

Indonesian coffee merchants, mostly ethnic Chinese, are inactive due to renewed tension in Indonesia where the Chinese are often the target of attacks during social unrest, they said.

"The situation is getting slightly better and some Chinese traders are still in the market. Atter all, they must collect the beans and do business," one trader said.

Vietnam, which is at the end of its harvest season, has offered small lots of coffee beans, but at higher prices than in Indonesia.

"You can still get a few thousand tonnes of beans from Vietnam if you can pay higher prices," the trader said.

In London on Monday, benchmark September robusta hit a fresh year-low of $1,520 and ended at $1,532, compared with $1,544 a week ago.

Indonesian supplies were offered at around $150 per tonne under London levels, steady from a week ago. Vietnam benchmark grade 2, five per cent black and broken beans were seen by the trade at around $110 under, also steady unchanged, but deals were rare.

Indonesia'sharvesting comes to an end in September and Vietnam's next harvest kicks in in October. Meanwhile, the Liffe coffee is set to move towards new lows after Monday's losses, technical analysts said. But traders called the market to open $8 higher on numbers.

Trevor Neil, senior analyst at Union Cal futures, expected Monday's $1,520 a tonne low on benchmark September to be broken on Wednesday or after."Only a move above $1,595 relieves the very bearish picture," Neil said.

New York coffee futures ended marginally higher in thin, sideways trading. Key Liffe coffee futures sank to their lowest this year on speculative selling on Monday afternoon, but met support that helped them to pare losses at the close.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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