On November 9, 2012 price for Arabica dropped to 149.6 cents per pound. This is the lowest point in last 2.5 years.
What factors cast pressure on coffee?
According to the Analytics Team of Commodity Trading Department of , current bearish factors are the following:
1. Bearish nature of USDA forecast
From this point of view current season is a small cycle, but yield has been the record one for this year’s small cycle. USDA data for the past years and its prediction for the season of 2012-2013 are provided in the table below.
As far as we can see, the yield in the new season of 2012-2013 (started on October 1, 2012) is expected to rise by about 7.5%.
2. Falling demand for coffee because of global crisis.
3. Many producers of coffee blends exchange Arabica for Robusta.
4. Despite the fact that during the season of 2011- 2012 coffee yield was smaller than in 2010- 2011, export during the season has risen by 3%, namely from 104.7 to 107.8 mln. bags.
5. Record yield of Robusta in Vietnam also casts pressure on prices.
6. Certain support to coffee price has been provided by small coffee stocks at the end of September 2012. However, due to rising export stocks are rising rapidly. In general, certified ICE stocks of new coffee yield as of 08.11.2012 have amounted to 2,426,923 bags, which is the highest point since September 2010.
The general USDA forecast for global coffee production during the seasons of 2011/12 and 2012/13 is provided in the table below.
