Global coffee growers may have something to cheer about as the 2007-08 season that started in October seems to have begun on a bullish note. With market fundamentals remaining strong, there is hope among the exporters that the price trend at the global level will continue to hold firm. According to latest report released by Nestor Osorio, executive director of International Coffee Organisation (ICO), the monthly average of the ICO composite indicator price increased to 115.71 US cents/lb in October from 113.20 cents/lb in September and 107.98 cents/lb in August.
In fact, the world coffee production in the current crop year ending September 2008 is expected to decline to 114 million bags from 121.65 million bags a year ago, but the coffee prices are expected to increase further on the back of rising consumption worldwide. The projected fall in production is attributed to the reduction in Brazilian production, although an increase in Vietnamese output is anticipated. Osorio said inventories of green coffee in importing countries totalled 20.35 million bags at the end of March 2007.
He also said buoyant world consumption is a significant factor in supporting prices. If the current trend continues, he said the world consumption could touch 122 million bags in 2007 and was expected to increase to over 125 million bags in 2008. He said market fundamentals continued to be favourable to the continuation of firm prices on the back of the current buoyancy of world consumption. Even for India, beginning of coffee year marked huge increase in prices. Although the exports during October 1 to November 14 this year declined to 24, 677 tonne from 26, 975 tonne, the coffee prices surged to Rs 91, 830 per tonne from Rs 78, 520 in the same period a year ago, while also increasing the foreign exchange earnings to Rs 226.61 crore from Rs 211.81crore. The ICO report further said that cumulative world exports for the crop in year-ended September 2007 increased by 9.70% to 96.74 million bags from 88.19 million bags a year ago.