Coffee prices hit 10-month low in December

Fluctuation likely till month-end

Global coffee prices, which hit 10-month lows in December, have continued a downward slide and touched a fresh low in last week’s trade. The International Coffee Organisation’s (ICO) composite index dipped three per cent to 149.18 cents a pound on Friday.

Over the past two weeks, prices of the Arabica variety have seen sharp movement between 179.07 and 200.22 cents before dipping to 191.73 on Friday. ICE Arabica coffee futures for March delivery fell 1.8 per cent to 176.65 a lb. The price could hover around 180 cents in the near term, traders said.

“There is lot of confusion in the market over the weather in Brazil and that has impacted the price movement. A more realistic picture would emerge only by end-January and prices will fluctuate sharply till then,” said Ramesh Rajah, president, Coffee Exporters’ Association.

Prices of Robusta are more or less steady at $1,998 a tonne. Prices could move up in the range of plus or minus $50 a tonne, he said.

The monthly average of the ICO composite indicator was the lowest at 150.66 cents in December 2014, compared to its previous low of 137.81 cents in February 2014.

The decline is mainly attributed to reports that Brazil, the world’s largest bean producer, might see quick recovery in its production for 2015-16, compared to the earlier estimates. Brazil’s production is provisionally estimated between 44.1 million and 46.6 million bags (each bag is 60 kg), according to Conab, the Brazilian crop forecasting agency.

Conab has also revised upwards the production figure for 2014-15 at 45.3 mn bags, 7.7 per cent less than 2013-14. A recovery in production seen in Colombia has also added pressure on prices in recent days. The Colombian production of Arabica is up by three mn bags, to touch 12 mn this year, Rajah said.