how long will cheap coffee last

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HOW LONG WILLCHEAP COFFEE LAST?

http://www.buyorganiccoffee.org/

HTTP://BUYORGANICCOFFEE.ORG/1573/HOW-LONG-WILL-CHEAP-COFFEE-LAST/

Arabica coffee futures fell by 24% in 2016

http://buyorganiccoffee.org/1573/how-long-will-cheap-coffee-last/



but how long will cheap coffee last?




Agrimoney.com speculates on Arabica coffee futures and asks if the rout in prices will end in 2016.



http://www.agrimoney.com/feature/arabica-coffee-futures---will-their-rout-end-in-2016--420.html


Coffee futures proved among the worst ag performers of 2015 - in particular New York-traded arabica ones which dropped by 24%, compared with the 21% decline in their London-listed robusta peer.




The drop to a large part reflected the decline in currencies in major producers Brazil and Colombia, cutting the value in dollar terms of a commodity in which they represent a large chunk of world supplies.




However, better weather in Brazil's main Arabica-growing state, after a dryness-plagued 2014, and the continued recovery in Colombian output after a replanting program early in the decade also played a role.




As did continued strong coffee exports from Brazil, which questioned lowball ideas for the country's inventories.




The low value of the Brazilian real made it more profitable locally for Brazilian coffee farmers to sell their coffee supplies as coffee is denominated in US dollars.




The glut of more coffee coming on line from the two largest producers of Arabica coffee drove prices down in dollars but because of the weakness of the real and the Colombian peso coffee farmers were still making a nice profit in their local currencies.




How long will cheap coffee last?




It is a matter of supply and demand. And the relative value of the real and Colombian peso versus the US dollar




Increasing Demand and Fragile Supply Side




Seeking Alpha speculates that increasing demand and a fragile supply side could strengthen the coffee market.



http://seekingalpha.com/article/3748386-a-fragile-supply-side-could-strengthen-the-coffee-market


According to the International Coffee Organization, demand for coffee is expected to rise ~25% in the next five years (from 2015). Demand is strong in developed countries such as Norway, Canada, the United States, and Switzerland.




But the biggest demand driver going forward is from emerging markets such as Algeria, Australia, Russia, South Korea, Turkey and the Ukraine. On a numerical basis, coffee demand has potential to jump to 175.8mm bags by 2020 from 141.6mm bags in 2014. (Note: A bag weighs in at 132 pounds)




This is another El Niño year and the last time this weather pattern visited South America it substantially reduced coffee production in Brazil and Colombia.




That has not yet happened this year but a combination of lower production and higher demand would be a recipe for higher prices in 2016.




Lower Brazilian Coffee Production




The USDA says that estimates of Brazilian coffee production have been revised downward which would reduce supply but selling of stocks from previous years may balance out the effect on prices.



http://www.fas.usda.gov/data/brazil-coffee-semi-annual-0


Brazil’s coffee production for MY 2015/16 was revised down to 49.4 million 60-kg bags, a nine percent drop relative to a revised number for the previous season, due to below average yields and smaller size of the beans in some growing areas.




Coffee exports in MY 2015/16 reached historic levels at 36.57 million bags, indicating that the 2014 harvest was not severely affected by the drought in Minas Gerais and São Paulo. Carry-over stocks from crops prior to 2014 also supported the steady flow of exports. Carry-over stocks for MY 2015/16 are projected down at 5.2 million bags.




In short it is not clear how long cheap coffee will last although there is certainly no immediate price hike on the horizon.




Coffee in Colombia



how long will cheap coffee last

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