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Coffee Price Decline in February, Says ICO


NUTRA
By staff reporter
March 14, 2007

Coffee prices recorded a further downward correction in February but were still at higher levels than the average for 2006, according to the ICO.

The ICO (International Coffee Organisation) composite indicator price fluctuated between a range of 101.99 -106.17 US cents/lb during the month compared to 103.92 - 109.09 US cents/lb in January. (Read the Coffee Market Report February 2007 under Coffee Links at the side bar of this page)

"The 'El Nino' phenomenon, which had decreased in intensity in December 2006, became slightly stronger in January 2007 before slackening again in February," said the organisation.

"It is still too early, however, to assess its impact on the coffee economy. In relation to the Brazilian situation, information received from EMBRAPA indicates that coffee producers are currently concerned about the unseasonable flowering of coffee trees."

This phenomenon has occurred since December 2006 in some coffee farms in the main coffee producing regions. Although there is not yet any consensus on the impact of this early flowering, some analysts think that the 2007/08 coffee crop could be affected.

During the first two months of 2007, Vietnam recorded exports of around 6.6 million bags. If this figure is confirmed, this will be the largest volume ever exported in such a short period.

Coffee prices, particularly in the case of Arabicas, were subject to a downward correction, with the monthly average of the ICO composite indicator price down from 105.81 US cents/lb in January to 104.18 US cents/lb in February, representing a slight fall of 1.54 per cent.

The behaviour of the market at the beginning of March indicates a continuation of this downward trend. The downward correction did not affect Robusta prices, which remained relatively stable, with the monthly average at 79.08 US cents/lb compared to 79.13 US cents/lb in January.

"Additional information received from a number of countries has led me to revise my estimate of world production in crop year 2007/08 to around 112 million bags," said ICO executive director Nestor Osorio.

"However, we must take into account the possible effects of the 'El Nino' phenomenon, which decreased in intensity in December 2006 before becoming stronger again in January 2007 according to the Australian Bureau of Meteorology (BOM) and the World Meteorological Organisation (WMO)."

Osorio said that the ICO has no new information that would lead to a revision of its estimate of world consumption in 2006 at around 116 million bags compared to around 115 million bags in 2005.

"In conclusion, I would like to indicate that coffee prices were subject to a slight downward correction in February. There were no notable changes in the supply and demand situation that could have a lasting effect on market trends.

"The current 'El Nino', which had become stronger in January, became slightly weaker in February. The March and April observations will permit a clearer idea of the likely impact of this weather phenomenon."

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