Coffee move creates a puzzle
• Engelhart’s warehouse transfer may signal plans to keep robusta off the market for several months, sources say
Engelhart is shifting some of its big purchase of certified robusta stocks to a new warehouse, signalling it may plan to keep the coffee off the market.
Engelhart is shifting some of its big purchase of certified robusta stocks to a new warehouse, industry sources say, 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 in 2016, had been moving certified coffee it bought 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 it a bigger sway over the structure of the futures market. The transfer to another warehouse signalled it was 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, sources said.
Engelhart and Dreyfus declined to comment. It is unclear how much of that coffee Engelhart has moved so far. The Intercontinental Exchange said it could not provide data on movements between certified warehouses. Exchange rules say operators must load out a minimum of 200 tonnes of coffee a day and must be able to empty their whole warehouse within 60 days if required. Engelhart’s move was primarily driven by economic factors, sources said, noting the trader could be looking to save on rental fees by striking a deal with another warehouse. The exchange has rules on the maximum amount operators can charge in rental fees, with Antwerp warehouses capped at €15 a 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 might 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 a 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 any time, 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.