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Coffee prices hit 10-month low in December

Global coffee prices continued to slide downwards in the recent month with the monthly average of the ICO composite indicator hitting the lowest level since February 2014. In December 2014, prices touched a low at 150.66 cents per lb (pound). The previous low stood at 137.81 cents per lb in February 2014.
 

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

Conab has also revised upwards the production figures for 2014-15 at 45.3 million bags, which is 7.7 per cent lesser than 2013-14.
 

According to International Coffee Organisation (ICO), the world production in crop year 2014-15 is provisionally estimated at 141.4 million bags, 3.6 per cent lower than the 146.8 million bags produced in 2013-14.
 

“The market remains well supplied with coffee, and expectations regarding Brazil’s 2015-16 crop seems to be improving. Several recent reports have forecast an increase in production in the next year, with sufficient stocks available to cover the shortfall in 2014-15,” ICO said.
 

In terms of the group indicators, the largest drop was registered in Brazilian Naturals, down 8.2 per cent compared to November on 166.58 cents per lb. All groups were significantly lower, with Colombian Milds down 7.9 per cent, Other Milds down 7.5 per cent, and Robustas falling by 4.5 per cent. As a result, the arbitrage between the three Arabica groups and Robustas narrowed, with the monthly differentials down by over 10 per cent compared to November. Price volatility was also somewhat lower in December for all price indicators, ICO said.
 

Meanwhile, India’s bean production, as per the post-monsoon estimates, for the year 2014-15 has been revised lower at 331,000 tonnes as against the initial estimate of 344,750 tonnes, a decrease of 3.9 per cent. The state-owned Coffee Board, which has made the forecast, has said the production for the current year will still be higher by 8.7 per cent over the previous year’s production of 304,500 tonnes.
 

“Due to the prolonged dry spell, the Arabica areas witnessed heavy infestation of Coffee White Stem Borers resulting in heavy loss of Arabica plants. Further 2014-15 being an ‘On-Year’ for Robusta crop, the continuing dry spell after backing shower had a negative impact on the development of coffee berries,” Coffee Board said.
 

Similar to the last year, after witnessing a long period of drought (after receiving backing showers), the coffee areas experienced continuous heavy monsoon especially in Karnataka. The continuous showers led to soil saturation and wet feet conditions resulting in defoliation and incidences of stalk rot and black rot leading to crop losses especially in Robusta coffee in Karnataka. 
 

The Hud-Hud cyclone on October 12, 2014 caused extensive damage to coffee plants in non-traditional areas due to large scale uprooting of shade trees leading to downward revision of crop estimates in non-traditional areas. 
 

While estimating the crop at post monsoon stage during November and December, these losses have been taken into account and accordingly the post monsoon forecast for the year 2014-15 has been placed at 331,000 tonnes. Of this, the Arabica production is estimated at 99,600 tonnes while Robusta at 231,400 tonnes, the Board said.

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