July 9 (SpillingTheBeans)–Robusta coffee futures at the London LIFFE futures exchange on Tuesday rallied to 1-month highs on fears the supply from the world’s largest robusta grower Vietnam is in trouble, traders said.
“London ran up through the 40-day moving average, holding on to most of the advance throughout the session. Conversely New York (Arabica) fell off after early strength,” said Michael Nugent, veteran commodity analyst at his Michael J. & Company, Inc., in a technical take on the price movements at the two key coffee exchanges.
“The Bear lost an opportunity to push prices just a little bit further which would have been seen as confirmation of the Bear Flag we mentioned yesterday,” said Nugent, adding that overall trading volumes improved despite investors still dealing with “limitted participation” and a slow cash market.
Coffee exports from Vietnam are expected to fall at least 35 percent in June to 1.5 million 60-kilogram bags, compared to 2.35 million bags shipped in the same month last year, according to the Agriculture Ministry in Hanoi.
Traders in London are now concerned that with the one-month-long Ramadan holiday ahead in key grower Indonesia seen slowing down sales there, coffee producers in Vietnam will similarly hold back on selling to push momentum toward higher prices.
“In robusta, Vietnamese are likely to keep holding on to what is left of the remaining 2012-13 coffee crop, causing premiums to rise again against London futures,” Kona Haque, a London-based analyst at Macquarie Group Ltd., Australia’s biggest investment bank, Bloomberg quoted the analyst for saying.
September Robusta coffee rose 2 percent to $1,858 a ton.