Coffee price dips as supply concerns ease: ICO

Coffee prices in February decreased slightly with the monthly average of the International Coffee Organization (ICO) composite indicator down by 1 per cent to 137.68 US cents per pound compared to 139.07 US cents per pound in January. The composite price varied within a range of almost 10 US cents per pound around the mean, from a high of 142.09 US cents per pound on 1 February to a low of 133.02 US cents per pound on 27 February. The price increase noted in January came to a halt as a result of increased stock levels and a positive outlook for the upcoming crop in Brazil. Among all of the ICO’s price groups, the monthly average prices of the Robusta group recorded the most pronounced decline, down by 1.7 per cent from 108.32 US cents per pound to 106.49 US cents per pound. However, the daily prices declined throughout the month to a low of 103.54 US cents per pound before ending the month on 105.33 US cents per pound. Hence, the positive price trend for Robusta has reversed in February after reaching a 5 ½ year high last month, the ICO said. The Arabica group indicators also fell slightly with Colombian Milds, Other Milds noted lower by 0.8 per cent, 1.3 per cent; Brazilian Naturals remained almost unchanged just 0.1 per cent lower compared to January. The movement of prices in February comes against the backdrop of a dispute in Brazil about whether or not to allow imports of Robusta in order to buffer supply shortages resulting from the poor Conillon harvest. This has led to an increase in the Brazilian domestic Robusta price and as a result, the Brazilian soluble industry has had to substitute the use of Robusta with lower grade Arabicas, the ICO said. While processors of soluble argued in favour of importing a limited amount of Robusta, farmers claimed that domestic supply was sufficient and that imports would be detrimental for local production. On 22 February the Brazilian President suspended the approval of the envisaged import quota of 1 million bags in order to allow for further analysis of the matter. Meanwhile Vietnam, the major Robusta producing country, is estimated to have exported 11.9 per cent more coffee in the first four month of coffee year 2016/17 compared to the previous year. Certified stocks on the New York and London futures markets have increased further by 3.1 per cent (from 1.45 to 1.49 million bags) and 2.5 per cent (from 2.73 to 2.80 million bags) respectively. Weather conditions in Brazil remain largely positive despite below average rainfall in Espírito Santo, the main Conillon producing region, somewhat alleviating supply concerns, according to the ICO. Preliminary data on the value of exports by all exporting countries in coffee year 2015/16 are now available, coming to an estimated US$ 20.1 billion for a volume of 104.8 million bags. This value is 5.9 per cent higher than 2014/15 despite a 1.4 per cent lower total export volume, reflecting the increase in prices recorded over the last year, the ICO said. Shipments by all exporting countries during January 2017 totalled 9.8 million bags, bringing the cumulative total for coffee year 2016/17 (October 2016 to January 2017) to 39.9 million bags against 36.7 million for the same period in coffee year 2015/16, an increase of 8.9 per cent. During this period, exports of Robusta and Arabica increased by 7.4 per cent and 9.7 per cent respectively.