Wednesday 29 May 2024
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ICO MONTHLY REPORT – Coffee prices at historic lows in real terms

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TME - Cialdy Evo
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LONDON – Coffee prices suffered further declines in October 2013, with the prices of all four group indicators sliding rapidly over the course of the month. The ICO composite indicator price averaged 107.03 US cents/lb in October 2013, a 4.3% decrease on September and its lowest level since March 2009.

Furthermore, in real terms the composite indicator is now below its level of January 2000, which marked the beginning of the period known as the ‘coffee crisis’.

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There can be no doubt that in many countries the prices received by coffee growers fail to cover the unit costs of production, while at the same time the prices of basic goods, such as food and energy, are rising.

All four group indicators fell sharply over the course of the month.

Gimoka

Colombian Milds dropped by 3.4%, Other Milds by 2.7% and Brazilian Naturals by 2.7%, to their lowest levels since December 2008, March 2009 and July 2009 respectively.

The most significant decline was observed in Robustas, which fell by 4.6% to 83.70 US cents/lb, their lowest level in three years.

Despite a slight decrease in September, total exports for coffee year 2012/13 reached a record volume of 110.2 million bags, comprising 68.5 million bags of Arabica and 41.7 million of Robusta.

Total production in 2012/13 is also estimated at a record volume of 145.2 million bags. World consumption is estimated at 142 million bags for calendar year 2012, and growing at around 2.4% per annum.

It is too early to provide an estimate of world production in 2013/14, which is now under way in all exporting countries, but early indications suggest potential decreases in some leading exporters.

Brazil is in the off-year of its biennial cycle, and the damage from coffee leaf rust in Central America is expected to become more evident.

Furthermore, it should be noted that the current low prices are likely to discourage farmers from investing and maintaining their crops, which may negatively affect future production levels.

Read the report at the following link (pdf file).

CIMBALI

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