Coffee prices stabilise after months of increases

By Anthony Fletcher

- Last updated on GMT

Related tags: 2006, Supply and demand

Coffee prices stabilised in September after two months of marked
price increases, according to the International Coffee Organisation
(ICO).

"Current supply and demand fundamentals lead me to believe that the level of prices that we see today could be maintained, although the market remains vulnerable to speculative movements,"​ said ICO executive director Nestor Osorio.

He noted that in the last 10 years coffee prices have been reasonably stable in the last quarter of the calendar year, with the exception of 1999 when there was a substantial increase between October and December averages and 2000, when there was a significant drop over the same period.

The monthly average of the ICO composite indicator price was 95.98 US cents/lb compared to 95.78 US cents/lb in August and 88.57 US cents/lb in July.

Prices fluctuated between 92.39 and 99.67 US cents/lb 1 during September.

Robusta prices moved up slightly from 67.09 US cents/lb at the beginning of the month to 68.63 on 29 September, indicating that tight supply of Robusta has been mitigated by expectations of a large 2006/07 crop in Vietnam.

"Prices continue to recover in coffee year 2005/06 after years of crisis in the coffee economies of exporting countries,"​ said Osorio.

World consumption continues to be an important factor in supporting current prices. It is estimated at around 117 million bags in calendar year 2006.

In calendar year 2005 it was estimated at 115 million bags, of which 30 million bags were accounted for by domestic consumption in exporting countries and85 million bags represented consumption in importing countries.

"In conclusion, the market in September has been relatively stable,"​ said Osorio. "By the end of this calendar year it should be possible to make a further assessment of the supply/demand balance for 2006/07 and the outcome for 2007/08."

In addition, the 96th Session of the International Coffee Council from 25 to 29 September 2006 considered proposals on the future of the International Coffee Agreement 2001, which expires at the end of September 2007. The Council decided to establish a Working Group, which will first meet on 22 January 2007 and will submit recommendations to the Council by the end of May 2007.

This should give the opportunity for all Members to present their ideas with respect to international cooperation on coffee.

"I am very encouraged by the interest and the constructive approach shown by Members in this process which I believe should lead in due course to a number of new and beneficial developments,"​ said Osorio.

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