Coffee prices underwent further downward corrections in December 2012, with the monthly average of the ICO composite indicator price falling by 3.7% to 131.31 US cents/lb, compared to a level of 188.90 US cents/lb at the beginning of the calendar year, says the International Coffee Organization.
This brings the average price for calendar year 2012 to 156.34 US cents/lb, 25.7% lower than 2011, but still higher than any other year in the last decade, although costs of production may have increased over time.
Price falls were particularly pronounced in the three Arabica groups, with Robustas recording a smaller decrease of 1.1% compared to November.
On the New York futures market, which reflects the situation of Arabicas, the average of the 2nd and 3rd positions fell by 3.9% from 155.72 US cents/lb to 149.58 in December, triggering a narrowing of 7% in the differential with the London futures market.
In terms of market fundamentals, it may be noted that the new coffee crop from exporting countries whose crop year 2012/13 starts in October is beginning to arrive in greater quantities on the market.
This crop year has witnessed increased production in a number of countries, notably in Africa and also in Indonesia. Brazil is currently in the on‐year of its biennial cycle of Arabica production, and is set for a record crop of 50.83 million bags according to the official authorities. This comprises 38.34 million bags of Arabica coffee and 12.48 million bags of Robusta.
However, some countries in Central America have been affected by adverse weather as well as coffee pest and diseases, in particular coffee leaf rust and coffee berry borer, which could have an impact on production levels going forward.
Finally, India has reduced its post‐monsoon estimate of the 2012/13 crop to 5.3 million bags. As a result, the provisional estimate for world production in 2012/13 has been revised to 144.1 million bags, a 7.2% increase on 2011/12.
World consumption remains buoyant, particularly in emerging markets and exporting countries. Moreover, opening stocks in exporting countries for crop year 2012/13 are estimated at 15.1 million bags, the lowest level ever recorded.
Exports by all exporting countries reached 9.2 million bags in November 2012, compared to 7.9 million the previous year. This brings total exports for the 11 months of calendar year 2012 (January to November) to 103.5 million bags, an 8.5% increase on the same period in 2011.
A record level of 108.7 million bags of imports was registered by importing member countries and Japan in coffee year 2011/12.