Robusta coffee prices on the London futures exchange are expected to open at a steady price at the beginning of the session, as the Arabica and Robusta coffee markets increased in price again. Cautious traders, Source Lon Don Coffee Fund continues to hold short positions.
Although they have slightly reduced the amount of short buying by about 3,000 lots compared to last week’s 2,000 lots of short buying. This shows that the Funds watch for low prices to buy and the scenario pushes prices up because the Funds can crush the market if they do not want to buy but decrease again.
Arabica coffee also changed from a downward trend in prices in the medium term and far term to buying in the medium term and near term with new short contracts up to 14,000 lots compared to only 7000 lots last week, proving that coffee is the Products that are of interest to the Investment Fund. They are manipulating the market with long-distance and forward contracts.
In Vietnam, buying and selling becomes complicated when goods for immediate delivery are in the 59,000-60,000 VND area. Goods delivered from a distance are about 2,000-3,000 VND/kg cheaper, equivalent to the price of Lon Don.
Buyers want to buy goods for long distance delivery contracts to keep and fix the goods, forcing the seller to pay a deposit of 5-10%. In case the price exceeds the 5-10% zone, they will call on the seller to add a deposit. In case the seller does not deposit more, they will unilaterally cut the contract and take the money to reverse the deposit.
The seller also calculated their options: if the price of Lon Don coffee is below 60,000 VND, they accept delivery to receive interest on the deposit and carry out the contract as committed. In case the price exceeds the 65,000-70,000 VND/kg zone, the seller will not carry out the signed contract because the buyer has received a 5-10% deposit, so they have unilaterally sold the product to another unit and lost. 5-10% deposit.
This leads to many difficulties in buying and selling young coffee. The method of signing long-distance contracts in advance is risky for buyers and sellers, especially contracts on paper without delivering actual goods.
As soon as contracts deliver 100% payment for real goods for investment coffee (young coffee), the seller and buyer must execute the contract.