According to Jeffrey Young, CEO of Allegra Strategies Ltd, this year’s net sales of coffee in the UK may increase by 7.9% and reach 2.1B pounds ($3.37B).
High prices won’t affect the growing demand for coffee, Jeffrey Young says. The current amount of the UK coffee houses owned by big-scale companies like Starbucks Corp. makes up 14 842 which is 5.8% more than in 2010. The demand for coffee is still high, despite the constantly growing coffee prices caused by the deficit of the global product.
Coffee farmers may start getting financial aid aimed at improving the storage conditions, the Brazilian representative of the commodities mission in London Marcos Pinta Gama says.
The financing issues were discussed during the weekend by the International Coffee Organization. We remind you that Brazil is the world’s major producer and exporter of coffee. The problem of preserving the coffee reserves is an urgent one as the net reserves of the importing countries are estimated at 13M bushels (1 bushel = 60kg), which is the lowest value ever seen.
Marcos Pinta Gama says that Brazil is the world’s 2nd largest consumer of coffee and in 4 years it may outpace even the USA (number 1). According to him the Brazilian authorities strive to improve the quality of coffee as it was the lack of high-quality coffee that caused the global price increase.
The prices of the forward contracts with delivery to Japan in July-September are expected to fall because of a possible decline in the demand for coffee in Japan after the earthquake. However the contracts implying April-June delivery cannot be revised.
Japan is the world’s 3rd largest importer (1.3M tons) and 4th largest consumer of coffee (Arabica). Most of the import comes from Brazil and Columbia. However it is too early to predict the scale of some possible consumption decline in Japan.
Analysts express different opinions about the impact of the Japanese disaster on the global market of coffee. The global prices are very likely to continue the rally. The main fundamental factors supporting the price growth are the following: extremely low reserves around the world, growing consumption and production problems in Brazil and Columbia. At the moment the price is consolidating within the 260-280 range. There are no fundamental reasons for a price decline.
