Wednesday, March 12, 2008

Hedge funds' exit hits coffee prices

Is the cupper of cheer heading towards a microscope slide after having enjoyed price
increase for a couple of
years? The new pricing trouble
stems from two factors: The issue of respective big hedgerow finances from international
coffee hereafters contracts and the fearfulness of a oversupply owed to a bumper java harvest in
Brazil. The Brazilian harvest is expected to lift by about 10 million bags â€"
to about 53 million bags (of 50 kilogram each) â€" and is expected to hit the
market in
September-December. With
derivatives, equities and share marketplaces slumping, planetary hedgerow finances have
increasingly establish trade goodss like gold, java and India rubber as good fund-parking
spaces. They put heavily into trade goodss hereafters contracts and issue when
prices peak. That’s what happened in the first hebdomad of March and that in
turn started sending the java prices
down. According to United
Planters’ Association of South Republic Of India (Upasi) sources, the terms of
arabica and robusta touched a 10-year and 30-year high respectively on February
28. Arabica was traded at 167 cents a lb on that twenty-four hours before it slipped to 148
cents on March 3 while terms of robusta per metric ton drop from $2,750 to $2,507. On an average, the issue of
hedge finances resulted in a terms diminution of 20 cents per lb of arabica and a
drop of around $300 per metric ton of robusta, traded on the New House Of York and London
International Futures Exchange
respectively. Coffee is the
second biggest traded trade goods in the human race in footing of value and volume, after
petroleum. Paper trading of java have always oversize the physical trading of
it. "A series of investors
ranging from large-scale hedge funds, java finances and angel finances put in
paper coffees. When terms are up these investors begin cashing out and start
scouting for other parking options. Coffee is a scrip that tin be actively
traded. Prices are subject to sentiments, motions of other commodities,
competition, basics and kinetics that are completely different from that
of stock markets," said sphere expert Harish Bijoor.

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