Falling coffee prices no cause for alarm, says ICO

Prices fell by four per cent in March to around 100 cents (US) per lb, and had dipped below the 100 barrier by 10 April, the International Coffee Organisation (ICO) said. It sought to reassure the industry, however, that a tighter supply and demand situation than in the past meant prices were unlikely to fall dramatically - as they did between 2001 and 2003. There was more good news for growers and producer countries as the ICO announced a 20 per cent rise in coffee exports by volume in the first five months of the 2006/2007 year, compared to the same period last year. And, fears over the El Niño​ weather phenomenon and its potentially damaging effects in the Asia Pacific region have so far proved largely unfounded this year. "Observations made in March indicate that its intensity has weakened,"​ said ICO executive director, Nestor Osorio. ​ On consumption, Osorio remained optimistic about emerging markets such as China in driving coffee growth. He said consumption was growing by 1.5 per cent annually and should reach 120m bags this year. "Although consumption in traditional importing countries is showing signs of stagnation, consumption is growing at a dynamic rate in a number of emerging economies and in some non-member countries." ​ ICO officials recently told BeverageDaily.com​ that increasing coffee consumption in emerging markets and grower countries themselves was a key part of their strategy for maintaining a market balance going forward. Marketing funds are likely to be allocated for this purpose in a new International Coffee Agreement, which is currently being discussed by ICO member countries. An EU source close to the discussions told BeverageDaily​ in February that talks for a new agreement, which would provide a forum to tackle industry-wide issues, had stalled. Osorio has repeatedly denied this and repeated in his March coffee report that talks were on track.