Coffee prices decreases on positive supply outlook-ICO
The monthly average of the International Coffee Organization’s (ICO) composite indicator price decreased significantly in April compared to March, down 2.7 per cent to 130.39 US cents per pound, according to the ICO’s monthly report.
After gaining slightly in the first half of April, daily prices started to decline sharply on 20 April, dropping to a low of 122.25 US cents per pound on 27 April. At month-end, daily prices were 6.9 per cent lower than at the beginning of April.
The sudden fall in prices in the second half of April is mainly the result of intensive activities of hedge funds selling off long positions, which had been building up over the past months, the ICO said.
This comes against the backdrop of an increasingly positive outlook for sufficient supply of coffee on the world market.The report stated that the combination of very high exports and growing inventories in consuming countries helped to overcome initial supply concerns.
Exports and Imports both Improved in 2016/17
Cumulative total exports in the first half of coffee year 2016/17 (October to March) amounted to 60 million bags, up 4.8 per cent compared to last year. At the end of December 2016, stocks of green coffee in importing countries reached 23.5 million bags, compared to 23 million in December 2015. In the first quarter of 2017, the inventories have further increased, reaching record levels in some countries.
The supply outlook for 2017/18 seems increasingly positive. Initial concerns about frost in Brazil and a shortage of rainfall in Vietnam affecting the 2017/18 crops have eased.
given low stock levels in Brazil, any adverse weather events in the coming months would pose a risk to future supply from that country, the ICO said. Similarly, the threat of an outbreak of coffee leaf rust in smaller producing countries such as Honduras adds uncertainty.
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