Global coffee exports declined by 1.5 million bags to 22 million bags during the first quarter ended December 2007 in the current coffee year (October 2007-September 2008).
However, the slight slackness in the first quarter of the coffee year, according to the latest data provided by the International Coffee Organisation (ICO), did not affect global exports in the 2007 calendar year, when the exports in the coffee countries increased by 3.7% to 95.5 million bags. Meanwhile, the second quarter of the coffee year started on a good note, as the price level recorded a further increase with the monthly average of ICO Composite Indicator price at 123.33 cent/lb in January 2008, compared to 118.16 cent/lb in December 2007.
The steepest rise was recorded for robusta, which is mostly used in instant coffee and espresso, with the ICO indicator price up from 91.39 cent/lb in December 2007 to 99.21 cent/lb in January 2008.
The behaviour of the market in the beginning of February indicates a continuation of the upward trend in prices for all four groups of coffee, as the ICO composite indicator price recorded on February 14 stood at 138.72 cent/lb.
Market fundamentals underpinned this upward trend, since there was a slowdown in exports as a result of a relatively tight supply situation created by producers, anticipating an even steeper rise in prices.
In a statement, ICO executive director Nestor Osorio, said the current increase in prices has generated speculative activities, particularly on the part of investment funds, which took significant long positions on the futures markets, provoking a supply shortage mainly in the case of robustas. Notwithstanding this upward trend, the appreciation of the national currencies of a number of exporting countries in relation to the US greenback increased the cost of inputs. Moreover, the social and political difficulties in Kenya seem to be having repercussions not only on the activities of the coffee chain in that country but also in Uganda, whose exports via the Kenyan port of Mombasa, have virtually ground to a halt since December 2007.
The ICO?s production outlook for crop year 2008-09 remains at between 123 and 126 million bags. In the case of the crop year 2007-08, which is still in progress, total production was estimated to be 116 million bags.
The ICO report also said the world coffee consumption
increased to 123 million bags in 2007 from 120 million bags in 2006.