Coffee prices down in January

By staff reporter

- Last updated on GMT

Related tags: Supply and demand

Coffee prices in January were subject to a slight downward
adjustment in relation to their December level, according to the
International Coffee Organization.

Executive director Nestor Osorio said that this was particularly the case for Arabicas. "The ICO composite indicator price was down from 109.09 US cents/lb on 2 January to 105.64 US cents/lb on 31 January,"​ he wrote in his monthly letter. "The trend remains firm, however, with the average for January 2007 representing an increase of 10.51 percent in relation to the average for the year 2006 as a whole."​ Price volatility became less marked on the New York futures market, with standard deviation of daily variation of the average of the 2nd and 3rd positions at 1.23 percent compared to 1.69 percent in December 2006. "Market fundamentals remain favorable to the maintenance of current price levels,particularly in view of prospects for sustained buoyancy in demand,"​ said Osorio. "On the supply side, I have continued tofollow developments relating to the "El Niño" phenomenon, which may have a negative impact in some coffee-producing regions." ​ Osorio added that the figure for world production in crop year 2007/08, indicated in his report for December, remains unchanged at between 109 and 112 million bags. In fact, Brazilian Arabica production, which is characterized by a marked biennial cycle in which an abundant crop in one year is followed by a reduced crop in the next, will be lower in crop year 2007/08. "World consumption in 2006 is estimated at around 116 million bags compared to around 115 million bags in 2005," said Osorio. "In 2006, domestic consumption in exporting countries accounted for around 31 million bags and consumption in importing countries for around 85 million bags. Scandinavian countries (Finland, Denmark, Sweden and Norway) continue to be the areas with the highest consumption."​ In conclusion, Osorio said that price developments in 2007 would reflect the situation of balance between supply and demand on the market. However, any analysis could be affected by speculative movements that may accentuate price volatility as well as perceptions of the possible impact of climatic phenomena like "El Niño".

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