Coffee prices drop for first time in five months: ICO

Coffee prices reversed for the first time in May, after five consecutive months of rises, the International Coffee Organisation (ICO) reported in its monthly coffee report on 10 June. From a high of US$1.79 in April, the daily ICO composite indicator price dropped to a low of $1.53 at the end of May. This was after Brazilian forecasting agency Conab lowered its estimate of the 2014-15 Brazil crop by around 4 million 60-kilogram bags to 44.57 million. The ICO noted that other market analysts, including the United States Department of Agriculture (USDA), say that damage might not be as serious, keeping its estimates at around 50 million bags. The USDA said that recent rains in Brazil have to some extent compensated for the earlier drought. CoffeeNetwork, in a report shared with GCR Magazine in late May, argued that the damage in irreversible. Based on on-the-ground observations, the group reported a drop in yields, and smaller cherries. As a result, CoffeeNetwork is reporting losses of 8 to 10 million bags. In its weekly report released on 6 June, Volcafe said that new crop arrivals are slowly increasing, however with continued reports of disappointing yields. It said that volumes traded remain on the low side for the season. The ICO reported that the drought in Brazil and this uncertainty over the crop have been driving prices higher since the beginning of the year. However it noted that a “well-stocked supply chain has not yet felt the impact” with exports from Brazil exceeding their levels of a year ago. It did note that stocks of Arabica on the New York market have been gradually falling every month since the beginning of the year, currently at around 2.9 billion bags. Good news continues to come from Colombia, with the country expected to produce its largest crop in six years. So far, Colombia’s total production for the first eight months of the year has been 7.9 million bags, according to ICO figures, 24.1 per cent higher than the same period a year ago. The ICO has revised up its Robusta forecast, by nearly 300,000 60-kilogram  bags to 12.33 million. This is mainly due to an improvement in the productivity, particularly in the region of Espirito Santo. The ICO said that the average yield for Robusta production is expected to increase by 3.4 bags per hectare to 27.5 in the 2014-15 crop year.