Stock exchange news. According to National Federation of Coffee Growers in Columbia, the second biggest producer of Arabica coffee beans in the world, coffee production in April has declined by 19 percent (523,000 bushels) after last year’s abundant rainfall hindered to gain proper crop from coffee plantations. One year ago the production level amounted to 647,000 bushels. Last month’s export declined by 2.4 percent (574,000 bushels; to compare, last year’s level amounted to 588,000 bushels).
Despite fundamental price favour, US dollar devaluation lowered the export income of many exporting countries (Brazil, Columbia, Guatemala, and India). Besides, the prices of oil products continue to grow, increasing expenses on important production factors in the system of coffee supply, such as transport and fertilizers.
Export of all exporting countries during March 2011 reached the new maximum of 10.4 million bushels in comparison to 8.7 million in March 2010. The total exporting volume during the first six months of 2010/11 (October 2010 – March 2011) amounted to 52.9 million bushels in comparison to 45.8 during the same period in 2009/10 (increase by 15.4 %). The overall export during the last 12 months (April 2010 – March 2011) amounted to 101 million bushels, which is the maximum level ever recorded. Encouraged by high prices and consumption growth, exporting countries increased the export of coffee.
During the first six months coffee Arabica has undergone most increase of export (35.7 million bushels in comparison to 29.8 million during the same period in 2009/10, which means the increase by 19.6 %). The export of Robusta increased by 7.6 % (17.2 million bushels in comparison to16 million one year ago).
The high export level, which to a considerable extent stimulates prices, is not likely to encourage the recovery of stocks in exporting countries. The volume of incoming stocks in 2010/11 yielding year amounts to about 13 million bushels, which means the decline by 36.7 % in reference to the level of stocks, registered in 2009/10. Material stocks in importing countries amount to about 18.3 million bushels.
To conclude, it is worth mentioning that high prices encouraged export increase during the first six months of 2010/11. The export level during this period was very high; however, this will delay the recovery of stocks in exporting countries. It is likely that the current price level will encourage investments in coffee industry, which in the long term will lead to lowering the world’s coffee deficit.
The Chair of Derivatives Trading of Masterforex-V Academy.
