Coffee prices keep declining trend

Considered the second most traded commodity in the world, coffee presented in last June, a sharp fall in prices. An uncertain macroeconomic scenario helped to bring the composite indicator price to its lowest level since September 2009, according to data released by the International Coffee Organization (ICO).
Total exports for the first eight months of coffee year 2012/2013 (October to May) came to 75.7 million bags, compared with the 72 million bags recorded in the same period last year.
Moreover, the price of goods in general declined over the month, mainly due to negative economic news from China and the United States.
Due to the evolution of current prices, there is a reduced incentive for producers to invest in their cultures, and to provide that the use of inputs such as fertilizer and labour will decrease. This may have a negative impact on the volume and quality of production over the next two years, which will have as its corollary the increased price volatility and agricultural value chain less sustainable.
The trend of steady decline in coffee prices remained in June, as the monthly average of the ICO composite indicator price fell 7.4% to 117.58 cents / pound, its lowest level since September 2009.
In terms of price group indicator, heavy losses were observed in all four groups. The Colombian Milds fell 6.8% to 147.55 cents / lb, representing the lowest average in more than four years. Other Milds also showed the lowest average in more than four years, down 6.1% to 138.26 cents / pound. The Brazilian Natural fell 7.9% to 120.01 cents / pound, the lowest level since September 2009. However, the percentage drop was observed in the stronger Robusta, with a decline of 8.5% to 90.79 cents / lb.
Interesting to note that the coffee market was also affected by changes in the global economic scenario. First, the weak economic data from China unexpected, earlier this month, suggested a slowdown in demand growth for commodities. Moreover, the signs of an end to quantitative easing program in the U.S. led to an overall drop in the markets for goods. These two factors have exacerbated, no doubt, the fragility of the coffee market and contributed to further price reductions.
In another context, the total production for crop year 2012-2013 is estimated at 144.6 million bags, an increase of 7.8% over 2011/2012.
Source: Hostel Vending Portugal