Price and Value | Global Forces in Specialty Coffee

By David Piza Cossio, Relationship Coffee Manager, Sustainable Harvest Coffee Importers

In early September of this year, international coffee prices for Arabica coffee plunged to a 4-year low, breaking the $1.16/lb threshold experienced back in the early stages of the Great Recession. The large Brazilian crop is estimated to surpass 50 million 60kg bags during crop year 2012/2013 and has coincided with a production recovery in Colombia, expected to top 10 million bags, adding pressure to the fundamentals. According to the International Coffee Organization (ICO) total production in crop year 2012/13 is estimated at 144.4 million bags, up 7.6 percent compared to the 2011/12 harvest. The impact of coffee leaf rust (roya) in Central America will only represent a total loss of less than 3 million bags and will not have a significant impact on the world production-consumption balance. This reduction most likely will have a more damaging effect among specialty roasters, leading to origin substitution in many of the higher quality commercial blends.

Certified stocks on the London futures market, which trades C. robusta coffee, have fallen to 1.3 million bags in recent months, indicating higher demand for this type of coffee in traditional markets. On the other hand, in the New York Board of Trade, certified stocks remained steady at a level of around 3.1 million bags. Both facts strongly suggest that demand for C. arabica has been weak while C. robusta has experienced a vigorous growth, mostly explained by increased consumption in both emerging and traditional markets.

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