November 2, 2012 / 4:06 PM / 5 years ago

Europe coffee: Strong demand for Brazilian beans

AMSTERDAM (Reuters) - Demand for Brazilian beans in Europe’s cash coffee market was strong this week as roasters stepped in to cover their immediate needs, traders said.

A worker selects coffee beans from coffee plants during a harvest at a farm in Esp’rito Santo do Pinhal, 200 km (124 miles) east of Sao Paulo May 18, 2012. REUTERS/Nacho Doce

“People are buying hand-to-mouth,” one trader said. “Buyers still have difficulties buying to cover their long-term needs, banks are hesitant to give loans and even if they can get loans they are too expensive.”

Differentials for Brazilian Swedish quality beans were unchanged on the week at 18 cents under New York’s March arabica contract on Friday.

“Trade was subdued in the second half of the week due to the November 1 holiday,” another trader said.

This year’s on-year crop in top producer Brazil’s biennial cycle has meant the market is well supplied with arabica beans, which has put pressure on prices.

ICE December arabica coffee futures were up 1.50 cents or 1.0 percent at $1.5495 per lb on Friday. The contract hit $1.5280 on Thursday, the lowest level for the front month since June 22.

”After the harvest from a high-yield year in Brazil had already put pressure on prices of Arabica coffee, this effect is now being compounded by rising shipments from Central American countries, Germany’s Commerzbank said in a note this week.

Coffee exports from Honduras rose 231 percent in October, the first month of Central America’s 2012-13 coffee season, to 59,111 60-kilogram bags compared with the same month last year, the country’s coffee institute, IHCAFE, said on Thursday.

Robusta coffee futures on Liffe crept higher on Friday with prices holding above a six-month low set earlier this week as the focus remained on Vietnam’s crop, which is expected to be large but slightly below last season.

Vietnam’s 2012/2013 coffee output will decline 15 percent due to adverse weather following a bumper harvest last season, an official of a Vietnamese export firm said on Friday.

European traders said the possible cut in Vietnam’s production did not have a big impact on Europe’s cash market as many were closed for business.

Market participants in some countries took Friday off for a long weekend following All Saints Day on Thursday, which was a public holiday in many European countries including Italy, France, Spain, Belgium and parts of Germany.

Reporting by Ivana Sekularac; Editing by Alison Birrane

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