Robusta coffee revisits nine-year highs.

FOLLOWING THE DIP to a three-month low in August, speculative buying coupled with near-term supply concerns provided a strong boost for robusta coffee futures in the first half of September. The bench-mark second position (November) contract on the London International Financial Futures Exchange (LIFFE) moved back up to US$1,896 a tonne on 10 September, its highest in eight weeks and only US$49 a tonne off the nine-year high recorded on 13 July. By close on 17 September, November had soared to US$2,026 a tonne, setting a fresh nine-year peak, although slipping back to US$1,996 in the following day's trading.

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While there is some supply tightness in the market currently, expectations of a large robusta harvest in Vietnam, the world's largest robusta producer, is building up negative sentiment for the market late in the year, traders said. The country starts its harvest in November, but there are growing concerns that the beans are not expected to arrive in time for delivery against LIFFE's November contract. Coffee exports from Vietnam in the 2007/08 crop year (1 October-30 September) are expected to reach about 15mn 60-kg bags, down 3.2 per cent from the large shipments in 2006/07, according to the Vietnam Coffee Association.

On 13 September, the International Coffee Organisation (ICO) raised its estimates of both crop and consumption for 2007/08. Due to a higher Brazilian crop, ICO increased its 2007/08 coffee production forecast to nearly 114mn 60-kg bags, up from the previous forecast of 112mn bags. ICO revised its 2007 world coffee consumption estimate to at least 122 million bags, up from August when it forecast consumption as likely to exceed 120mn bags.