COFFEE MARKET NEWS 30th August – 3 September 2010 Futures Markets: Arabica: Prices hovered unchanged for almost of the week. Long liquidation was prompted as the market hit another 13 year high of 186.95 on the close. Activity remains quiet reflecting the physical market that remains slow. In London, the Robusta market remained in a modest range. Futures and Currency close levels:

NY Dec-10 c/lb Lon Nov-10 $/t £/$

Monday Tuesday 181.40 (+2.55) 178.45 Closed 1641 (+4) 1.5399 1.5338

Wednesday 182.35 1647 1.5391

Thursday 184.85 1641 1.5380

Friday 186.95 1639 1.5449

Physical Markets Brazil: Traders have begun to monitor the weather in Brazil as the rain season approaches. Due to the La Niña, rains may be delayed this year. According to SOMAR, a cold front may bring some rains to the coffee region on September 12-15. Dry weather continues to cause concern to farmers and exporters and traders. Colombia: According to the FNC of coffee growers, coffee production in Colombia's southern Cauca province is expected to reach 637,500 bags in 2010, rising from 495,833 bags a year earlier as 4,200 hectares renovated three years ago began entering into full production. Improved flowering also allowed a recovery in the main harvest. Cauca produces 7% of the country's total output. The province has renovated 14,700 hectares in past three years. The expected recovery in Cauca is a positive signal for Colombia, as it aims for 10 million bags this year after seeing output drop to 7.8 million bags in 2009 due to unfavourable weather and a tree renovation program. Guatemala & Honduras: Heavy rains in Honduras and Guatemala can cause damage to the infrastructure. Kenya: Prices at Tuesday’s auction rose with AA Grades selling at US$500 per 50kgs ex auction compared with US$ 430 last week. India: Coffee exports recorded a 56% rise to 204, 519 tons during January- August period of this year against 130,672 tons exported during the corresponding period last year on the back of sound demand growth from its main markets. In value terms, exports rose 48 percent to US$ 441.598 million during this period against US$297.936 million last year. Exports of Robusta variety experienced a 54 percent increase to 112,027 tons compared to 72,700 tons reported last year. Arabica coffee exports have also witnessed a rise of 66% to 39,077 tons during this period compared to the same period last year. As per the data available with the Coffee Board of India, major European consuming countries like Italy and Germany had contributed towards this export growth. Total exports to Italy rose 21 percent to 8,192 tons during this period, while Germany registered a 20.6% import growth to 8,038 tons. Indonesia: Robusta coffee exports from Indonesia's southern Sumatra fell 44% in August because heavy rains delayed harvests and farmers held onto stocks waiting for higher prices. Shipments of Sumatran Robusta coffee through the main Sumatra port of Panjang in Bandar Lampung fell to 25,902 tonnes from 46,106 tonnes a year ago. Philippines: Local coffee chains and NGO’s are encouraging coffee growers to plant Arabica coffee in a bid to market Philippine-made coffee beans worldwide. Vietnam: Business has slowed due to lower international prices. Exporters were reluctant to sell due to the uncertain situation.

COFFEE MARKET NEWS 30th August – 3 September 2010 Global: Coffee prices may surge even higher during the next few months if La Nina lives up to some of its predecessors, according to analysts at bank Abn-Amro. La Nina, which is associated with cool Pacific water temperatures, may already be having an impact on many coffee-producing countries, with shipments of Robusta beans from parts of Indonesia slumping by one-third last month from July 2009. Brazil, the world's top Arabica producer, could "see much less rainfall" next year than is needed for the good development of the 2011-12 crop if this La Nina weather phenomenon proves a significant one. With potential dry weather coinciding with what will be an "off" year for Brazil's Arabica crop, which operates on a two-year cycle, "it is feasible" that world Arabica output will fall. USA: Petspresso is the new organic dog shampoo introduced by The Coffee Bump, a commercial coffee website, containing real coffee grounds. Petspresso is made from all natural and organic ingredients and uses real coffee grounds to neutralize pet odours and soothe dry skin. Information provided courtesy of D.R. Wakefield www.drwakefield.com

COFFEE MARKET NEWS 9th – 13th August 2010 Futures Markets: Arabica: coffee futures settled higher on spec short covering. Lack of origin selling and good support below 166.00 cents, on the September chart lent support to prices. Specs that were playing the short side covered positions as prices recovered from the lows. In Brazil, 75 % of the crop has been harvested according to Safras & Mercado. Activity was dominated by spread trading since participants mainly stayed on the side. During the week, Arabica futures jumped 4.8 % or 8.10 cents. Fund buying pushed the prices to the highs encouraged by the technical picture. Buy stop orders and a cold front forecasted to reach the south of Brazil, during the weekend, pushed up coffee prices. Last report from SOMAR, keeps the polar mass associated with the cold front, out of reaching the coffee areas. In the physical markets, higher prices have slowed the business considerably, differentials climbed again. In Brazil, traders remained concerned with the delay of shipments in the port of Santos. Currency: The U.S. dollar closed higher against the Euro, as investors braced themselves ahead of the Federal Reserve meeting that could disappoint some looking for big policy changes. The US dollar rallied as much as 2.4% against the Euro, which fell to 2 ½ week lows, as investor fled most risky assets as an unexpected drop in Chinese industrial output increased concern about the global economic recovery. Monday NY Sep-10 c/lb 169.60 (+2.20)

Tuesday

Wednesday

Thursday

Friday

169.65

170.60

175.55

175.50

Lon Sep-10 $/t

1724 (+6)

1708

1708

1735

1731

£/$

1.5896

1.5790

1.5705

1.5573

1.5601

Futures and Currency close levels:

Physical Markets Colombia: Colombia's main coffee harvest may produce 6 million 60-kg bags in the second half of 2010 but the intensity of rains will determine if it meets the target, coffee officials from three states said on Tuesday. The world's largest producer of high quality Arabica beans saw a dramatic fall in production to three-decade lows last year due to a drought and a tree renovation program, but bean players expect a recovery in 2010 to 10 million bags. Kenya: Local prices in Kenya are expected to stay firm in the short term partly supported by proceedings in international markets where indices have pointed towards favorable prices over July. The benchmark AA grade of Kenyan coffee is at its highest level since 1998. The grade fetched a top price of $489 per 50-kg at the latest auction on Tuesday, up from $446 per 50 kgs at the last sale held on June 22. The top price for AA peaked at a record $702 per bag in late March. Farmers report that unseasonal rains at the start of this year were likely to cut production by about 10-20% in the 2010/11 (Oct-Sept) coffee year from about 2 million kg this year. Uganda: expects coffee exports to drop 4% to 250,000 60-kg bags in August compared with the same period a year ago due to low rains, according to the Uganda Coffee Development Authority (UCDA). Uganda is Africa's second-largest coffee producer. UCDA revised its 2009/10 (Oct-Sep) crop projection to 2.7 million bags from about 2.8 million bags previously. Continued…/

COFFEE MARKET NEWS 9th – 13th August 2010 Indonesia: Coffee exporters in Indonesia's main growing province of Lampung in Sumatra have stockpiled at least 120,000 tonnes,, highlighting the difficulties of securing export-quality beans from the current harvests, while a plunge in exports from Sumatra (in July) was also caused by many exporters choosing to hold on to their coffee. Indonesia is the world's second-largest producer of Robusta after Vietnam. Consuming Countries News: On Friday Kraft Foods announced a hike in its retail prices by over 10 percent on select Maxwell House and Yuban ground and instant coffees in the United States. The increases are 30 cents per lb equivalent on ground coffees and 2-1/2 cents per ounce on instant. For ground Maxwell House coffee, this marks a steep 11 percent increase to $3.01 per 1-lb equivalent can, from $2.71, using data provided by Kraft in May. Increases are due to sustained increases in the cost of green coffee, said a company’s spokesperson. The J. M. Smucker Company increased on Tuesday the list price for the majority of its Folgers, Dunkin' Donuts, Millstone, and Folgers Gourmet Selections coffee products sold in its US retail coffee market. Tea and coffee maker Bettys & Taylors saw sales rise by 15 percent in 2009 despite the gloomy economic picture, according to its latest director’s report. Pre-tax profits for the year to October 2009 were £7.7m, down from £7.954m in 2008, while profits after tax were down two per cent. The company, which also sells ethically sourced tea and coffee through its Taylors of Harrogate business, recorded a slight impact on profits from the increasing costs of raw material and currency fluctuations. Pre-tax profits were £7.7 million, down from £7.954m in 2008, while profits after tax were down two percent. The business donated £289,000 to charity during the year, including £100,000 made through its Yorkshire Rainforest Project, in which it aims to save an area of rainforest the size of Yorkshire from destruction. Starbucks’s sales in Ireland posted "single-digit growth" in the second quarter of the year. The figures only compare growth with the same stores open last year. Nestle Nespresso officially opened its 200th boutique worldwide in the city of Shanghai. It joins new boutique locations opened this year in Miami, Cape Town, and a new flagship boutique in Brussels as Nespresso continues to grow its global retail network Information provided courtesy of D.R. Wakefield www.drwakefield.com

COFFEE MARKET NEWS 2nd – 6th August 2010 Futures Markets: Wheat prices have hit a 22-month high after a severe drought and ensuing wildfires in Russia devastated crops. Chicago Board of Trade (CBOT) wheat for September delivery broke through the $7-a-bushel level in US trade for the first time since September 2008, before falling back to $6.93. Prices have risen 50% since late June. Concerns are growing that the rise will lead to an increase in prices of flour-related products such as bread and biscuits. Arabica : A possible reversal of the recent uptrend induced large spec driven liquidation of Arabica futures early in the week. Earlier on Monday the market made a new 12 & 1/2 year high of 181.55 cents. The market rallied early helped by a general rise across all commodity markets and the strength of the world equity markets. However after new highs were posted, the buying dried up inducing the spec selling. Futures ended the week lower after suffering a sharp drop around mid-day on Friday; this was due to bearish US unemployment data which weighed heavily on both equity and commodity markets. However, the market was able to bounce back into the close as the speculative selling dried up. During the week, Arabica coffee futures declined 8.90 cents or 5 %. The move was attributed to speculative liquidation after the market failed following new highs. Robusta : coffee hit a 21-month high in early trading before trimming gains. Brokers said fund activity was the key driver for the recent strength in both of the coffee markets as funds continue to add to their long positions. Over the week Robusta prices fell $92 or 5 %, in line with the New York. Currency : The Dollar weakened against both the Euro and the Pound as unemployment figures rose in the USA surprising analysts. Private sector job creation was disappointing.

Futures and Currency close levels: Monday Tuesday NY Sep-10 172.50 (-3.80) 166.65 c/lb Lon Sep-10 1778 (-32) 1717 $/t £/$

1.5885

1.5926

Wednesday 169.75

Thursday 169.85

Friday 167.40

1741

1740

1718

1.5869

1.5882

1.5964

Physical Markets: La Nina: In Brazil, a cold front was said to be approaching the coffee region during the weekend (7+8Aug), which will cause a drop in temperature but there is no risk of frost. (At time of writing on 9th Aug – No frost reported) According to CEPEA, (Brazilian center for Economic Studies), the La Nina phenomenon, could have an impact on the coffee crops in Brazil, Colombia, Vietnam and Indonesia. The phenomenon could produce dry periods in the south, southeast, and center west. In Colombia, it could bring heavy rains to some of the coffee regions. Brazil : A total of 101,000 bags of green coffee were exported from August 1st – 4th. Colombia :coffee production rose 35% in July while exports dropped 3% like month year on year according to the (FNC) coffee growers' federation. The world's No. 3 coffee exporter and largest producer of washed Arabica beans saw a dramatic fall in output last year due to drought and a crop renovation program, but growers expect a recovery this year to more than 10 million bags. Honduras : Honduras will export 4.2 million bags in the crop year ending September, a drop of 9% from the previous estimate of 4.6 million bags, because of losses from bad weather and a coup, according to the Honduran Coffee Institute (Ihcafe). El Nino damaged crops by triggering dry spells in some coffee producing regions and earlier than expected rains and cold temperatures in others. Landslides and flooding from Tropical Storm Agatha in May damaged crops and roads used for shipping coffee. Honduras is expected to become the world’s 6th-largest coffee producer overtaking Guatemala, according to statistics from the International Coffee Organisation. Guatemalan plantations were damaged by rains and by the eruption of the Pacaya volcano in May. Honduran coffee growers and exporters will be present at Tokyo's 2010 World Specialty Coffee Conference and Exhibition in September. Angel Arturo Paz, president of the Honduran Speciality Coffee Association, indicated that the country needs to promote its product in high coffee-consuming markets. The SCAJ World Specialty Coffee Conference and Exhibition 2010 will be held in Tokyo during the penultimate week of September Guatemala: Guatemala, the regions top grower, said coffee exports fell 14.4% in July to 299,649 bags. Ivory Coast exported 89,794 metric tons of robusta coffee in the October-June period, up 52% on the 59,172 tons shipped in the previous season, according to official trade data. The beans were mainly exported through the port of Abidjan. The coffee exporting season runs from October to September and peaks in January to May, during the seasonal lull in cocoa harvesting. Malawi : Coffee production in Malawi is expected to jump 29% to 1,800 tonnes according to the Coffee Association of Malawi (CAMAL). Coffee is expected to bring in about $6 million in export revenue. The Malawi coffee industry has about 3 000 smallholder farmers and 11 estates. Figures from CAMAL indicate that there has been a downward trend in Malawi’s coffee bean production every year since 1991, when the country reached a peak of 7,720 tonnes of coffee beans. Kenya : Kenya’s coffee sales in the 6 months ending June fell 40% to 23,062 metric tons compared with the same period a year earlier, according to the Kenya National Bureau of

Statistics. The auction of the headquarters of indebted Kenya Planters' Co-operative Union was cancelled as the government moved to prevent the sale. KPCU, the largest union representing small-scale coffee farmers in Kenya, was placed in receivership in November by Kenya Commercial Bank Ltd. after it failed to settle a US$8.1 million debt. Last week, the Kenyan Ministry of Co-operative Development and Marketing advertised in the press, that it had issued a caveat emptor on the land on which the KPCU property stands. This warned potential buyers that the property had unresolved issues. The Kenya Coffee Producers' Association chairman, James Gitao has said the government should rescue the once giant coffee union to prevent the collapse of the sector. Cameroon' : Robusta coffee exports reached 32,545 tonnes after the first 7 months of the season to June, up 87% compared with levels last year. Uganda : exports in July were stable at 266,245 60-kg bags versus 265,927 in July 2009, according to the Uganda Coffee Development Authority (UCDA). The harvest in South Western Uganda is reaching its peak. Uganda is Africa's largest Robusta exporter. India : Coffee exports from India, the world's fifth biggest producer, jumped about 46% to 224,075 tonnes between Oct. 1, 2009 and Aug 2 according to the Coffee Board. The state of Karnataka is the country's biggest coffee producing state. India is Asia's third-largest coffee producer behind Vietnam and Indonesia. The value of coffee exports in the first seven months of 2010 rose to $379.78 million from $259.39 million. India's 2010-11 (OctoberSeptember) coffee output is seen up 3.6% with rains improving significantly over growing regions in July and planters using fertilisers on time. In addition there are no signs of any pest attacks. Agronomists at the Coffee Board also confirmed there had hardly been any adverse reports from growers that this year. Indonesia : Robusta coffee exports from Sumatra have fallen by nearly a third in July (year on a year) and will continue as exporters plan smaller sales in anticipation of poor rains causing a smaller harvest. If exporters hold onto supplies as expected, there is potential for London robusta coffee futures to rally further from a 21-month peak reached on Monday at $1,843 a tonne. USA : The J. M. Smucker Company announced that it will increase the list price for the majority of its Folgers, Dunkin' Donuts, Millstone, and Folgers Gourmet Selections coffee products sold in its U.S. retail coffee market effective today. Prices will increase an average of nine percent on impacted items. The increase in price is driven by sustained increases in green coffee costs. USA : Peet's Coffee & Tea, Inc. yesterday announced its second quarter results for the fiscal quarter ended July 4, 2010, which included 13 weeks. The specialty coffee chain based in Emeryville, California had sales of $80.8 million in the quarter ended July 4. A year earlier in the second quarter, Peet’s earned $3.4 million on sales of $73.6 million. As of July 4, Peet’s had 193 coffee shops, one more than at the end of the second quarter of 2009. UK : Buckingham Palace has opened its own cafe this week for the 400,000-plus tourists it expects over nine weeks of the summer.

Information provided courtesy of D.R. Wakefield www.drwakefield.com