The January 2009 Coffee Market Update was released yesterday. According to the bi-annual Reuters Poll arabica prices are expected to rise by 20% by the end of 2009. The world-wide financial crisis is expected to negatively impact growers’ ability to spend on inputs to production (fertilizer, tree care, labor, etc), thus decreasing coffee outputs and enacting the always present supply/demand equation.
At the same time history shows an increase in coffee consumption during economic downturns. Yes, believe it or not consumption rises at home and this has been true over every economic contraction over the last forty years. Think bulk bean sales!
Bullish Coffee Stance
All polled analysts showed a bullish position on coffee. The coffee market is expected to tighten in 2009-2010,as both Brazilian and Vietnamese crops are expected to be off slightly while world wide demand remains stable or increases.
Plus (and probably most telling) major fund and investor movement into the coffee market has been made in early 2009. Believe it or not! Investors are seeing these conditions and placing their money investments into “long” coffee futures contracts. The lowest “high” price in the poll was forecast to be $1.20 and the highest “high” was 2.00 p/pd.
Once again the same old record plays…if you need it and can find comfort on a forward price point, by all means we would recommend depth in availability secured by forward contracts. Buy ahead and save your worries for when and if it works for you.
Yours In Coffee,
Andrew Vournas
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Feel free to email us anytime or call to speak with our friendly staff M-F, 8AM – 4:30PM PST about this January 2009 coffee market update, current market trends, our stock of green coffee offerings and how we can help improve your roasting business. 800.761.JAVA
