* Around 60 pct of certified arabica held in Antwerp
* Rule change seen luring coffee to U.S. warehouses
By Sarah McFarlane
LONDON, May 2 European warehouse firms fear that
Antwerp will lose its dominance as a profitable storage hub for
exchange-graded arabica coffee as new fees applied by
Intercontinental Exchange benefit their U.S. rivals.
The "cost adjustment" fees are likely gradually to shrink
the volume held in the Belgian port city, where around 60
percent of the world's certified arabica is now stored.
"In 12-14 months a lot of coffee will go out from Antwerp
slowly and will not be replaced, while coffee will probably be
delivered into American ports," a European warehousing source
Antwerp has been a prime location for owners of stored
coffee because warehouses there attracted stocks partly by
charging low rates for depositing material.
They later made money partly through higher charges on
companies taking delivery to retrieve the commodity.
The change introduced in March by ICE, the main exchange for
arabica coffee, will require anyone delivering beans to
warehouses in locations with higher load out costs than New
York, which is used as the benchmark, to pay a fee.
Antwerp faces the highest cost adjustment, at $1.62 per
Warehouses estimate the fee means an additional cost of
between 13 and 17 euros per tonne, while some clients are ready
to change warehouses to save as little as 3-4 euros per tonne.
The changes will mean that traders, when deciding where to
store certified coffee, will be less swayed by the cost of
moving stock into warehouses and more by fundamental factors
such as where the consumer demand is.
Certified stocks are those that have been confirmed as good
for delivery against ICE futures contracts. As they make up only
part of total arabica stocks in Antwerp, which were around 4.8
million bags at the end of 2012, the port should remain the top
location to hold coffee in Europe.
But the warehouse firms, mostly privately owned, are
"Warehouses have to react to this situation, we have to
approach the exchange to know what's behind this, as we would
prefer to be heard before any other potential changes are made,"
said Oswaldo Aranha Neto, managing director of warehouse keeper
"It's going to make Antwerp not in the market for fresh
Asked why the exchange made the change, an ICE spokeswoman
said: "The intent of the provision is to address the wide
discrepancy between load-out costs in different delivery
Warehouse companies said the exchange also aimed to reduce
the concentration in one location of stocks of arabica - the
higher quality variety chiefly used in ground coffee as opposed
to robusta, which is largely used for instant coffee.
Antwerp warehouses held around 1.68 million bags (equivalent
to around 100,000 tonnes and roughly $300 million in value) of
certified arabica coffee as of May 1, of a total of around 2.73
million bags held in ICE nominated warehouses globally,
according to exchange data.
"It would seem that the change would allow the other factors
in the market to become more relevant; where should the coffee
go, where are the users for it, the more fundamental reasons,"
one U.S.-based warehousekeeper said.
"(This is) as opposed to going to Europe just because of
flat out cost savings on the way in," the executive added.
The changes follow complaints in recent years that the
concentration of NYSE Liffe exchange-certified robusta
coffee at a few Antwerp warehouses created a supply bottleneck.
IntercontinentalExchange Inc's agreement to buy NYSE
Euronext, including its commodity trading arm NYSE
Liffe, could mean certified robusta warehousing may soon be
subject to similar fees. The deal is still subject to European
Union antitrust approval, which market players say might require
some NYSE Liffe contracts to be sold.
Problems with warehousing are troubling other commodities
markets, notably in metals such as aluminium and zinc. Consumers
complain of long queues to withdraw material in some facilities
registered by the London Metal Exchange (LME).
ICE-licensed coffee warehouses in Antwerp include Antwerp
Coffee & Cocoa Logistics NV, C. Steinweg NV, CWT Commodities,
Durme-Natie CVBA, Henry Bath B.V., Molenbergnatie NV, Pacorini
Antwerp NV, Unicontrol Commodity BV, Vollers Belgium NV and
Antwerp has long been a European trade hub due to its
central location and warehouse companies expect it will remain a
favoured place to store coffee when its final destination has
not been determined and could be in northern or southern Europe.
"Antwerp is not just certified stock - it's still the most
convenient and competitive European port for overall coffee
stocks," Pacorini's Neto said.