Global coffee prices supported by lower stocks

by Commodity Online

Coffee stocks globally are already at their lowest levels although coffee production for crop year 2010-11 is estimated to have increased 8.6% to 133.7 mn bags compared to last year. What is now further improving the coffee prices prospects are the adverse weather in coffee growing regions of the world and rise in prices of petroluem products that add to the cost of production of most agricultural products.

Brazil is estimated to have higher coffee production of 48 mn bags during crop year 2010-11 while Columbian production is slowly recovering from the low levels of the three preceding crops years. Arabica coffee is set to rise on lower availability. Arabica coffee futures on ICE rose to the highest level in 34 years earlier this month with the second month peaking at almost $3.00 per lb.

Global coffee consumption in 2010 is estimated at 132.5 million bags against 131.2 million bags in 2009. Despite signs of a slowdown in some exporting countries, domestic consumption continues to develop, particularly in Brazil, which is the world's second largest consuming country after the US. The average annual growth rate of world consumption since 2000 is around 2.3 per cent.

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