Coffee prices recovering after years of crisis

By staff reporter

- Last updated on GMT

Related tags: 2006

The coffee market recorded a significant rise in Arabica prices in
November, while Robusta prices rose only slightly according to the

While the arrival of Vietnamese coffee on the market slowed down themomentum of the Robustas, the monthly average of the International Coffee Organisation (ICO) composite indicator price rose from 95.53 US cents/lb in October to 103.48 US cents/lb in November.

"I would like to indicate that coffee prices remained firm in November, sparked off by the prospect of a significant fall in Brazilian production for crop year 2007/08,"​ said ICO executive director Nestor Osorio.

"In view of this expected shortfall, firmness is likely to continue. However, the depreciation of the dollar has reduced the value of the price rise. With regard to stocks, a rebuilding is not probable in the near future in producing countries."

The price of coffee, an important commodity for both food and beverage producers, has been steadily rising this year. Prices have started to recover after years of crisis in the coffee economies of exporting countries.

ICO executive director Nestor Osorio went on to say that the fundamentals of the coffee market seem to be supporting the current price trend. Production incrop year 2005/06 totalled 109.39 million bags whileworld demand in 2006 was around 116 million bags.

"As announced on 15 December, Brazilian officialCONAB crop estimates for 2006/07 have beenrevised upwards by nearly a million bags to42.5 million, which leads me to revise our globalproduction figures to around 121 million bags,"​ he said.

"At present, I am not in a position to give a figure forworld production for crop year 2007/08 sinceinformation from other countries is still awaited."

Osorio also emphasised the importance of stock levels in importing countries as a variable closely related to price movements.

Exports during October 2006 totalled 7.06 million bags, which is a slight fall compared to 7.44 million bags in September 2006 but a rise of16 per cent compared to October 2005. Exports during the first ten months of 2006 (January October) were 75.02 million bags as against 73.55 million bags for the same period in 2005.

"Although calendar year 2006 has not yet ended,world consumption can be estimated at around116 million bags compared to 115 million bags in2005,"​ said Osorio.

"Domestic consumption in exporting countries accounts for around 31 million bags and consumption in importing countries for around85 million."

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