December brings little price relief to coffee producers: ICO

Coffee prices have fallen consistently over the course of 2013, with decreases recorded in nine out of the last twelve months, according to the latest Monthly Market Report from the International Coffee Organization (ICO). Although prices in December rose slightly compared to November, the ICO composite indicator is still at its second‐lowest level of the year, and 2013 recorded the lowest average annual price since 2009. The ICO says that this price performance has been driven by a surplus of production over consumption, as high prices in 2011 encouraged producers to invest in and expand their output. That trend has now been reversed, as prices fall below the cost of production and deter further investment. Looking at 2013/14, Brazil is expecting a record off‐year crop of 49.15 million bags, just 3.3 per cent lower than 2012/13, with mixed prospects in other major exporting countries. In the short‐term, this is likely to place continued downward pressure on the coffee market, the report states. However, with certified stocks on the London futures market approaching record lows, and consumption continuing to grow at around 2.4 per cent per year, demand for coffee remains buoyant and should provide potential for further growth in the longer term.

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