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Coffee Market Outlook 2012


 

Coffee is getting more and more popular with both importing and exporting countries. Unfortunately, the situation in global commodity markets is ambiguous. The overall tendency is bearish. However, there are occasional hikes connected with bad weather and other factors affecting production. What should investors get ready for?

 

 

 

 
What is the situation in exporting countries?
 
According to Masterforex-V Academy, this year coffee futures contracts have already depreciated by 39% as investors anticipate an abundant coffee harvest in Brazil, the world’s major producer of the premium-quality “Arabica” coffee.
 
Brazil has been the world’s leading coffee producer over a long period of time (over 48% of the global production). Its influence on the global market of coffee can hardly be overestimated. Experts anticipate a price decline in May-June attended by hikes in advance of mass supplies. However, unstable weather conditions may cardinally change the situation. In particular, Southern Brazil keeps suffering from droughts while scanty rains do little to increase the crop capacity.
 
Ethiopia and Columbia. These two countries are the runners-up in terms of coffee production. According to the ICO, this year Ethiopia is expected to gather a more decent harvest than Columbia. Substantial rains are expected to contribute to the harvests of coffee in both the countries.
 
Vietnam . Its coffee harvest is expected to improve due to rainy weather. Vietnam grows a cheaper sort of coffee. It is called “Robusta”. More affordable prices make it more popular with the middle class. This year Vietnam is expected to gather a record-high harvest - 1.32 million metric tons. The price on Robusta is expected to be around $1.9 per pound while Arabica is getting less popular (its price is around $1.82 per pound).
 
Last year’s results
 
Throughout 2011 Masterforex-V Academy experts reported about an uptrend. It was based on the following factors:
 
Coffee prices. For example, in winter Arabica prices more than doubled, thus exceeding the 14-year high, mainly due to higher consumption, lower production and scanty reserves.
 
Coffee deficit.  It was caused mainly by Brazil’s poor coffee harvest. Amid higher prices, the global sales volume was relatively low as coffee producers were waiting for price hikes.
 
Market volatility. Last spring global markets were rather volatile (major declines) amid the eurozone crisis and volatile US Dollar.
 
Coffee Market Outlook 2012
 
The global consumption of coffee keeps growing every year:
 
USDA. The experts anticipate a slight production decline. However, it will exceed the global consumption (135m bushels, 1 bushel = 60kg).
 
ICO. The International Coffee Organization expects the global consumption to exceed the global production in 2012 due to Brazil’s lower production last year caused by unfavorable weather conditions.
 
Chemico Limited. If to consider its forecast, the average annual price of Arabica will decline by 8% but retail prices may stay unchanged as major coffee houses have already bought substantial amounts of coffee for sale.
 
Masterforex-V Academy. Several factors may cause a sharp decline in coffee prices: volatile currency markets, weather conditions, speculative factors, higher refining of coffee beans by major importers, higher re-export, seasonality, poorer harvest in Africa etc.
 
The Commodity Trading Department of Masterforex-V Academy anticipates a price decline if the previously considered forecasts match the actual data. However, another major price hike is probable in late May in advance of mass supplies.

 

цены на кофе

 

 

Market Leader and Masterforex-V Academy would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:
 
What is your coffee market outlook for 2012?

 

 

 

You are free to discuss this article here:   forum for traders and investors

 

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