LONDON – Coffee prices have fallen consistently over the course of 2013, with decreases recorded in nine out of the last twelve months. 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 (119.51 US. cents/lb, down 23.6% on 2012).
All four group indicators are down year-on‐year, with the most significant decreases in Colombian Milds (down 26.8%) and Brazilian Naturals (‐30.1%), followed by Other Milds (‐25.2%) and Robustas (‐8.4%). This confirms two consecutive years of lower prices for the first time since 2001.
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% 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. However, with certified stocks on the London futures market approaching record lows, and consumption continuing to grow at around 2.4% per year, demand for coffee remains buoyant and should provide potential for further growth in the longer term
Total exports in November 2013 amounted to 7.8 million bags, down 14.4% compared to November 2012. Exports of Other Milds, Brazilian Naturals and Robustas were all lower year‐on‐year, but exports of Colombian Milds were significantly higher at 1.2 million bags, up from 843,000 bags last year.
Certified Robusta stocks on the London futures market fell further in December to just 501,000 bags, compared to 1.8 million in December 2012. Arabica stocks on the New York futures market registered a slight increase to 3.1 million bags.
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