The Hindu Business Line : Coffee prices firm up further

THE worst may be over for the world coffee market if current global price trends are anything to go by. Despite a slight dip in October, reversing the hardening trend in the previous month, prices have again started to firm up in the first few days of November, raising hopes that the worst may possibly be behind the market already.

Global coffee prices are showing a divergent trend. Arabica prices are firming up slightly, while those of robusta have fallen. According to International Coffee Organisation (ICO), market fundamentals continue to favour an upward trend in arabica prices since prospects of a reduced supply in many exporting countries have become clearer.

Despite the increase in arabica prices, the monthly average of ICO composite indicator price fell slightly down to 61.10 US cents per pound in October compared to 61.47 cents/lb in September 2004. However, in the first two weeks of the current month, prices have somewhat recovered with the market on November 11 at 65.39 cents/lb.

World coffee consumption is estimated at 113.08 million bags (60 kilograms) for calendar year 2003. Total world production during crop year 2004-05 is estimated at 112-114 million bags. Coffee exports during the year ended September 2004 were 87.49 million bags, slipping from 88.11 million bags in the previous year.

Meanwhile, the Foreign Agricultural Service of the US Department of Agriculture (USDA) in New Delhi has forecast India's coffee production during 2004-05 (October-September) at 4.8 million bags (290,000 tonnes) with the share of arabica placed higher at 1.9 million bags and robusta lower at 2.9 million bags.

For 2003-04, Coffee Board's estimate of production was 4.5 million bags (270,500 tonnes) comprising 1.7 million bags of arabica and 2.8 million bags of robusta.