The best quality coffee, arabica market, has not much benefited from the General rally which has benefited raw materials prices and made pale figure within his own segment, tropical products. Since October 2008, the contract for delivery in March 2010 by the New York Stock Exchange, ICE Futures US (formerly Nybot) oscillates between 1.2 and 1.5 dollar a pound. A first escape attempt failed in June. A new trial is ongoing since re-entry, but it is done without great conviction. "The market starting to respond to problems associated with the offer," says Judith Ganes, an expert of tropical products. The weakness of the rebound, whose first objective is sustainable rise above 1.45 dollar pound is fundamental ahead favourable to the application.
BNP Paribas Fortis Commodity Derivatives, the world production of arabica for the 2009-2010 season is expected to exceed consumption by nearly 11 million bags of 60 kilos each. A figure multiplied by more than 10 relative to comparable to that of 2007-2008 and 2008-2009. One crop to another, the volumes could rise by 11.6 in 2009-2010. And this while aggregate demand remains slack, to 78,34 million bags. The Bank forecasts are based on expectations of harvesting in the strong growth in Latin America ( 16.5).
Low reduction potential
Another medium courses comes from Brazilian farmers choosing to exercise the option of selling to the Federal State of one million bags of coffee. This faculty, recognized producers until 13 November, will be followed by the exercise of options for sale for 2 million additional bags. According to the Brazilian authorities, all of the rights of sale will be exercised. Not surprising if one considers that the Executive of the country agrees a purchase price of 303,50 reals (117,90 EUR) per bag then that, end of November, of better quality coffee from Brazilian plantations is exchanged on the open market between 275 and 280 reals.
But the South American crop could lower expectations. Wet precipitation reached earlier in the year have indeed slowed the harvest and it is likely that they have degraded the quality of the grain of the 2009-2010 season. The Colombian harvest is not not free of issues. The 2008-2009 a revised down to 8.1 million bags. He is a figure that is likely to be again revised downward, when the extent of the damage caused by the engraver of the coffee tree (black weevil 2 mm larvae Pierce galleries in the seed) will be better identified. If they were more serious that expected, the anticipation of the USDA (Department of Agriculture of the United States) of a rebound at 11 million bags of the Colombian harvest in 2009-2010 would be so invalidated. If one adds that throughout the land planted in coffee, farmers have reduced the use of fertilizers, prices have become prohibitive, can legitimately rely on a general decline of plantations and, thereby, productivity on a decline in production.
Finally, says Judith Ganes, global coffee consumption declined in spite of the financial crisis, introducing an element of rigidity of the course. Many arguments that minimize the potential of lower prices of bean and allow some investors to play from now their rebound.
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