Commodity trader stashing coffee stocks

London

ENGELHART CTP is shifting some of its big purchase of certified robusta stocks to a new warehouse, industry sources have told Reuters, signalling it may plan to keep the coffee off the market and potentially move to extend its grip on stocks.

The commodity trader, spun off by Brazilian bank Grupo BTG Pactual last year, has been moving certified coffee it purchased on the futures market in July out of the warehouses where it was initially stored to another facility in Antwerp, sources said.

Engelhart, a relative newcomer to global commodity trading, was behind 74,850 tonnes of coffee taken in the July delivery period, leaving the trade house with ownership of about half of certified stocks.

Traders interpreted the purchase as Engelhart attempting to build up certified stocks, which would give them a bigger sway over the structure of the futures market. The transfer to another warehouse signalled it is unlikely to be planning to sell the coffee right away.

A large chunk was stored in the 4Stox warehouse in Antwerp owned by Louis Dreyfus, according to sources.

Engelhart CTP and Louis Dreyfus Company declined to comment.

It is unclear exactly how much of that coffee Engelhart has moved so far and the Intercontinental Exchange (ICE) said it cannot provide data on movements between certified warehouses.

However, exchange rules say operators must load out a minimum of 200 tonnes of coffee per day and must be able to empty their whole warehouse within 60 days if required.

Sources said Engelhart's move was primarily driven by economic factors, noting the trader was likely looking to save on rental fees by striking a deal with another warehouse.

ICE has rules on the maximum amount operators can charge in rental fees, with warehouses in Antwerp capped at 15 euros (S$24.15) per tonne for bagged robusta coffee.

"If you stopped the market and you don't have an agreement with the warehouses, your negotiating position is not that strong," said one source. "But if there is a friendly warehouse that is hungry across the street, then you can just go to them." The move has also signalled that Engelhart may be preparing to hold the coffee for at least several months, sources said.

Any time stockholders want to move their coffee out of a warehouse, they must pay a fee to the operator. Warehouses in Antwerp are allowed to charge up to 37.13 euros per tonne to load out robusta coffee.

"It looks like they're going to have to hold it for a few months," said a second source. "Otherwise they would not be willing to incur the cost of moving the coffee around warehouses." The market is also monitoring whether coffee continues to move in September, the next delivery month.

Although coffee can be transferred between warehouses anytime, owners who move certified stocks during a delivery month cannot tender those beans in that same time period.

If Engelhart continues to transfer coffee it could indicate it is seeking to maintain or build its stockholding rather than deliver to a roaster. REUTERS