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What conflicting coffee data can you believe?

From the July 2013 issue.

With estimates for Brazil’s 2013-14 crop varying by 10 million bags, it is hard to know whose forecasts to trust. So how do roasters, traders or buyers decide what information to base their decisions upon?

BrazilThere was a time when coffee forecasting was easy. That was when the International Coffee Organisation (ICO) was one of the only global institutions releasing forecasts for world production and consumption. Sure, the US Department of Agriculture (USDA) was also in business, but as producing countries regularly met with importing nations to decide on export quotas and minimum prices, all parties would make sure the balance was right.

That all came to an abrupt end in 1989, when coffee prices crashed because of massive overproduction and the US decided to leave the ICO’s International Coffee Agreement on export quotas and minimum prices. As the Cold War came to an end in the years that followed, so did the unwritten agreement between the ICO and the USDA to keep figures for supply and demand in check.

With the demise of Cold War politics came a new market fully empowered by free trade. A consequent effect of that development is a coffee market that today is bombarded with countless forecasts from private traders, analysts, exporters, green coffee buyers, investment funds and roasters as well as the traditional official institutions.

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