LONDON – The ICO released yesterday its first estimate of world production for CY 2013/14 in its monthly report. Based on the information currently available, total production for crop year 2013/14 is provisionally estimated at around 145.8 million bags, representing a slight increase on the 145.1 million bags produced in 2012/13.
Coffee prices surged higher in January, with the monthly average of the ICO composite indicator price at its highest level in four months at 110.75 US cents/lb, up 3.9% compared to December 2013.
The composite increased consistently over the course of the month, starting at a low of 104.52 and finishing on a high of 117.56, an increase of 12.5%.
The ICO group indicators underwent more mixed fortunes, with the three Arabica groups all increasing significantly while Robustas fell slightly. Colombian Milds, Other Milds and Brazilian Naturals recorded average increases of 5.0%, 5.4% and 6.2% respectively; Robusta prices decreased slightly by 0.2%.
These price developments reflect the contrasting availability of Central American origins compared to Colombian.
In terms of the Arabica/Robusta differential, the arbitrage between the New York and London futures markets increased in January by 16.8% compared to the previous month, to reach 43.67 US cents/lb.
Much of the recent price support has been due to speculation over the size of the upcoming Brazilian crop. The first estimate by Conab of the 2014/15 crop gives a forecast of 46.53 to 50.15 million bags, with an average of 48.34 million.
If realised, this average would represent two consecutive decreases in Brazilian coffee production for the first time since 1977, and would suggest that the significance of the traditional biennial cycle of production is waning.
The expected decrease is attributed to a reduction in the area of production, as well as lower levels of crop investment caused by falling coffee prices.
Furthermore, particularly dry weather in January in several coffee‐growing regions in Brazil has been seen as detrimental to the development of the 2014/15 harvest, supporting coffee prices over the course of the month
According to the information currently available, total coffee production in 2013/14 is provisionally estimated at 145.8 million bags, a 0.5% increase on 2012/13. Production of Arabicas is expected to decrease by 3.8% to 85.4 million bags, or 58.6% of the total.
This is mostly attributable to a 9.1% decrease in Other Milds, following the ongoing outbreak of coffee leaf rust in Central America, as well as a 2.2% decrease in production of Brazilian Naturals. A 2.3% increase is anticipated in Colombian Milds to 12.2 million bags, and Robustas are provisionally forecast for a 7.2% increase to 60.3 million bags.
Download the full report at this link.
