Thursday, December 29, 2011

Questions Americans Want Answered: "Arabica coffee prices - what does 2012 hold?" (Commerzbank; Goldman; Morgan Stanley Weigh in)

From AgriMoney:
Arabica coffee, as traded in New York, is on track to fall some 8% in 2011, a better performance than managed by most other soft commodities, but a poor result compared with the rise of more than 75% in 2010.
Besides the weaker global economic outlook, prices have been held back by a bumper crop for an "off" year in Brazil, the top producer, where arabica output has alternately higher and lower years.
But output in Colombia, the second-ranked arabica producer, has – again – disappointed, thanks to poor weather.
Brokers below give their forecasts for 2012.
"Arabica coffee… should in our opinion remain above 200 cents a pound in 2012 – a high price level, historically speaking – even if the peaks of 300 US cents a pound seen in 2011 are likely to be a thing of the past. 
"High-quality arabica beans in particular could remain in short supply, due to the continuing precarious situation in Colombia.

"A positive factor is that Brazil is poised for a high-yielding crop year in the biennial cycle and Brazilian beans are now also approved for delivery to the New York exchange.

"[But] Brazil had to struggle with a drought between May and September, which hampered the growth of the beans to the extent that no new record will be possible in the next harvest which begins next May

"The fact therefore remains that the global coffee market has been in deficit for years, and at best the forthcoming 2012-13 season could end with supply and demand roughly in balance."

Goldman Sachs

"We expect lower global 2011-12 production (on Brazil's off-year of the arabica plant's two-year cycle), strong emerging market demand growth and low beginning stocks to keep prices elevated....MORE
Also at AgriMoney: