Excerpts
from ICO Monthly Coffee Market Report
October
2012
Coffee
prices underwent further declines in October, as both Arabicas and Robustas
lost value during the month. Over the last six months, the ICO composite
indicator price has mostly maintained a range of around 140 – 160 US cents/lb,
averaging 147.12 in October, its second‐lowest level in over two years. Volatility for all group
indicators fell slightly compared to the previous month.
Crop
year 2012/13 has now started in all exporting countries, and on the basis of
the information currently available, total production is estimated at around
147 million bags, compared to 134.5 million bags in 2011/12. The majority of
this increase can be attributed to the on‐year in the biennial cycle of Arabica production in
Brazil. Production in Vietnam during crop year 2011/12 has been revised upwards
to just over 24 million bags, 23.6% higher than in 2010/11. Strong production
was also recorded in Honduras and Peru, among others. Furthermore, world production
of Robusta coffee in 2011/12 reached a historical record of 53.3 million bags.
World consumption, on the other hand, is estimated to have increased to around
139 million bags in calendar year 2011, and is expected to increase further in
2012. The supply/demand balance should therefore remain relatively tight.
Exports
by all exporting countries in September 2012 were 7.9 million bags, compared to
7.7 million in September 2011. This brings total exports for coffee year
2011/12 to 107.8 million bags, the highest level on record, and a 3% increase
on 2010/11. Exports of Robustas reached 41.8 million bags, representing 38.8%
of the world total. Exports of Arabicas were 2.6% lower than 2010/11, at 66
million bags. A brief analysis of exports in selected exporting countries is
included in this report.
Price movements
The
monthly average of the ICO composite indicator price fell by 2.8% in October,
from 151.28 US cents/lb in September to 147.12. All coffee groups lost value, although
price falls were highest among the three Arabica groups, with Colombian Milds,
Other Milds and Brazilian Naturals falling by 4.6%, 3.2% and 3.2%, respectively.
Robustas were down 0.5% compared to September. The differentials between Arabicas
and Robustas also fell month on month, with the arbitrage between the New York
and London futures markets narrowing by 6.1% compared to the previous month. Volatility
for all groups was lower than in September.
Market fundamentals
Crop
year 2011/12 has now finished, with total production estimated at 134.5 million
bags, a 0.8% increase on the previous year. The drop in production normally
associated with the Brazilian biennial cycle was entirely offset by strong increases
in Vietnam, Honduras and Peru, among others. Indeed, production for Vietnam is
estimated at just over 24 million bags, a record volume. Honduras also achieved
a record crop of nearly 6 million bags, making it the largest producer in Central
America for the second consecutive year. El Salvador, however, saw production
fall by an estimated 37.1%, as adverse weather and an off‐year cycle severely affected
production levels. There are also reports of a coffee leaf rust outbreak in
several Central American countries, which could impact production in the
future.
In
Africa, Côte d'Ivoire seems to have recovered from the political crisis that
affected production in 2010/11, as it recorded nearly two million bags in 2011/12.
Production in Ethiopia, on the other hand, is estimated to have fallen by
nearly 20% compared to 2010/11. Finally, despite some promising signs of recovery
towards the end of the coffee year, production in Colombia fell to an estimated
7.6 million bags, its lowest level in nearly 40 years.
Crop
year 2012/13 is now in progress in all exporting countries. On the basis of
available information from Member countries, early indications are that total
production is estimated to be around 146 to 148 million bags. This crop year coincides
with the on‐year of the Arabica production
cycle in Brazil. Strong performances are also expected in several other
exporting countries.
Total exports
Total
exports in 2011/12 reached a record 107.8 million bags, a 3% increase on
2010/11. The most significant change was observed in Robustas, which grew by
13.2% to reach 41.8 million bags, representing 38.8% of the world total. This
was driven mostly by strong performance in Vietnam (a 39.3% jump compared to
2010/11), as well as a recovery in Côte d'Ivoire. Exports of Other Milds also
increased, by 8%, to 27.5 million bags.
Colombian
Milds and Brazilian Naturals, on the other hand, both fell year on year, by
9.6% and 8.9% respectively. Aggregate exports of Arabicas in 2011/12 were 66
million bags, a 2.6% decrease on the 67.8 million bags exported in 2010/11.
To
conclude, coffee prices slipped further in October, but remain relatively firm
in historical terms. Total exports for coffee year 2011/12 reached record
highs, with shipments of Robustas the main driving force. Total production in
crop year 2011/12 also increased, despite the Brazilian off‐year cycle, and early
indications are that production will continue to increase in 2012/13.
Meanwhile, world consumption is also expected to remain buoyant. If the record
production for 2012/13 is confirmed, the coffee market will move into a surplus
of supply, although any impact on prices is likely to be modest given the need
to replenish stocks, especially in producing countries.
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Read
full report here: http://www.ico.org/news/cmr-1012-e.pdf