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COFFEE WORLD ■ 29
C&CI
NY futures seem more in line with the US Dollar currency fluctuations New York futures seem less in line with other physical coffee prices,
particularly mild Arabicas
March 2010
tionship between the Real/US$ The tightness in Arabicas has been boost export availability and thereby
exchange rate fluctuations and New accentuated following last summer’s increase the supply of Arabicas onto
York coffee prices is obvious from the harvest in Brazil, which suffered huge the world market.
figure. quality losses due to the rains as well
There may also be some seasonal as generally low availability of quality
Pessimism
pressures affecting prices, said coffee exports elsewhere in the world.
Macquarie. The peak coffee demand
over Colombia
period from roasters is waning now, as
Concerns about the
Dwindling supplies from Colombia, the
we move into spring and lack of buyer world's largest producer of top-quality
support may have lowered the price
next Brazilian crop
mild washed Arabica coffee, have also
floor, compared with the peak fourth "With a clearer view on the size of contributed to the global shortage of
quarter period, when strong roaster Brazil’s next crop not likely to be avail- premium Arabica coffee. Colombia's
demand prevented prices from falling able before harvest time approaches, total 2008/09 coffee harvest ended at a
too far. uncertainty will continue," said 30 year low of 7.8 million bags, down 32
Another possible factor is the loom- Macquarie. "Being an ‘on season,’ per cent from the prior year and well
ing Brazilian crop. "The sight of cher- Brazil’s coffee crop should be large. below its target of 11-12 million bags.
ries developing nicely and abundantly But there is growing concern that the "Hopes are fading for a recovery in
on a large number of coffee trees in heavy rains in the fourth quarter of the current 2009/10 season… and
Brazil is leading many to believe they 2009 have led to such a variation in the based on output in the first three
will have a bumper crop in the 2010/11 flowering stages and bean develop- months, Colombia is going to struggle
April-March season," said Macquarie. ment that when it comes to actual har- just to reach 9 million bags from now
vest, yields may fall as mechanical until the end of the season in
Physical
cherry picking will not be able to dis- September 2010," said Macquarie. "Total
criminate between ripe and unripe cof- output in the first three months of
market is tight
fee cherries."
None of the above factors, however, "Our initial base US green coffee stocks have fallen sharply – Green Coffee Association
take away from the fact that the case is for a coffee
Arabica coffee market is fundamentally crop of 50–52 million
tight. Macro concerns and currency bags. Should it come
fluctuations will always remain a large in lower, then this
influence on the futures prices, but at would further accen-
what point will the futures start reflect- tuate the global tight-
ing the rising cash prices being ness in Arabicas,"
observed at different Arabica origins? said Macquarie, not-
Origin prices and differentials are up ing that Brazil’s
as the figure reproduced here shows. domestic consump-
Prices in Colombia in particular have tion is rising rapidly,
soared way above that on the ICE, with yet their stocks are
the differential between New York and at historical lows.
Colombian mild Arabica coffee spiking This being the case,
to 74c/lb on the back of two seasons Brazil will need a
of falling production in Colombia. large crop in order to
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