Rabobank predicts high coffee in Q1

Coffee prices traded in New York tend to rise in the first quarter, according to the Dutch bank Rabobank. The institution, one of the largest agricultural lenders in the world, says the market begins to reflect the fall in the prices of the Brazilian crop in 2013/14 and the deficit in the supply of global commodity.
Rabobank also believes that a reversal of the high short position of investment funds in the stock market and the fall of the difference between Arabica and Robusta coffees (traded in London) also favour a rise in prices in New York.
Although the Brazilian crop walk to be the largest ever recorded in a year of low income in the biennial cycle of coffee plantations, production should recede between 1.3% and 7.6% this year to 50.16 million and 46.98 million of bags, according to the National Supply Company (Conab).
According to the Value Date, Arabica contracts for delivery in May are up from 0.73% last week in New York - the commodity ended the trading session on Friday to US$ 1.5125 per pound weight. In the month, the valuation is 3.10%. In 2012, coffee declined over 30% in the international market.
Some coffee producing countries of Central America have suffered from adverse weather and the onset of diseases such as rust, which must commit to production. The problems in the region have been monitored by the International Coffee Organization (ICO), which in a report released this month cut 1.3% to 144.1 million bags, their projection for world crop 2012/13. The production of Central America plus the Mexico is projected by the ICO in 19.74 million bags, representing 13.69% of the world harvest provided by the entity in 2012/13.
Rabobank says, however, that one of the major risk factors for falling grain prices would be a possible acceleration of the availability of Colombian coffee market. In the first two months of the season 2012/13, production was 4.5% higher than in the previous season.
A possible upward revision of Vietnamese Robusta coffee crop - currently estimated to be 8% drop - can also negatively influence the prices, said the bank. Another point of attention is the high stock carried by Brazilian producers, which if made available to the market abruptly could push product values.
Source: Revista Cafeicultura