Coffee prices drop while demand remains strong: ICO

The International Coffee Organisation (ICO) monthly coffee report for April highlighted that coffee prices have continued their downward correction, despite the absence of significant changes in market fundamentals.  The ICO composite indicator price dropped 4.4 percent from March to April to 160.46 US cents/pound. This represents a decrease of 30.6 per cent in relation to April 2011, and 23.7 per cent in relation to the annual average for 2011, the London-based organisation reported. This drop in the composite price is mainly a reflection of the downward correction in Arabica prices, as the ICO notes that Robusta price levels remain firm with average prices for the first four months of 2012 still above those recorded during the last quarter of 2011.  Despite this downward correction, the ICO notes that market fundamentals continue to show strong demand and dropping supply. Exports by all exporting countries in March 2012 totalled 9.9 million bags, bringing the total for the first six months of the coffee year to 51.7 million bags, which is 1.2 million bags less than the same period a year prior. The ICO estimates that global consumption for 2011 was 137.9 million bags, an increase of 1.7 per cent over a year prior. The report says that “world consumption continues to show signs of buoyancy linked mainly to increased consumption both in exporting markets and emerging markets.” The ICO notes, however, that there are some signs of significant decreases in important markets such as Spain and Italy, which are said to be linked to higher retail prices and macroeconomic turbulence.