Brazil’s weather drives price volatility: ICO

Continued drought in Brazil pushed prices up in early in January, hitting a high of US$1.55 in the middle of the month, the International Coffee Organization (ICO) said in its monthly report. However, forecasts of rain later in the month punctured this brief rally, causing the ICO composite to fall back down to US$1.43 cents by the end of January. Nevertheless, overall rainfall levels in Brazil remain below average, with the development of the 2015-16 crop now at a crucial stage. Furthermore, an infestation of coffee berry borer has led to a state of phytosanitary emergency being declared in the states of São Paulo and Espírito Santo, the ICO said. As a result, the monthly average of the ICO composite indicator price settled 1.6 per cent lower on US$1.48 per pound in January, its lowest level since February 2014. All four of the ICO’s group indicators fell, although Robustas were more stable, down just 0.4 per cent. Total exports in December came to 8.9 million bags, virtually unchanged on December 2013. A 5.5 per cent decrease in exports of Arabica (down to 5.2 million bags) was matched by a 9.9 per cent increase in Robusta (up to 3.6 million bags), according to the ICO report. Exports for the first three months of coffee year 2014-15 (October to December) are estimated 0.8 per cent lower on 25.4 million bags, with Arabica exports nearly 1 million bags lower in this time period. However, world exports in calendar year 2014 came to 111.7 million bags, which is the highest on record. This export performance has been driven primarily by shipments from Brazil, which has increased from 31.5 million bags in 2013 to 36.3 million in 2014. Exports from Vietnam are also estimated significantly higher, on 25 million bags, which has compensated for a dramatic decline in exports from Indonesia, which have dropped from 10.9 million bags to an estimated 4.5 million in 2014. Colombia, on the other hand, has increased from 9.7 million bags in 2013 to 11 million in 2014. Finally, exports from Central America are mostly recorded lower in 2014 as the coffee leaf rust outbreak continued to affect production, which is also the case in Mexico and Peru, the ICO said.

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