ICO says output in crop year 2014-15 is expected to decline by 4.6 million bags over the previous year, but prices are falling nevertheless.
Falling coffee prices are a threat to growers. The International Coffee Organization (ICO) says output in crop year 2014-15 is expected to decline by 4.6 million bags (a bag weighs 60kg), or 3.2% lower over the previous year. But prices are falling nevertheless. Although the market is in a deficit state, ample stocks with countries are supporting exports. Also, the strength of the dollar spells bad news for commodities, especially those in which there is an active financial market.
Weaker currencies such as the Brazilian real also mean that exporters don’t feel the need to cut back exports, as their loss in realization in local currency terms is much lower. For Indian growers, the silver lining is that the price of Robusta grade, the main local variety, has declined far less than Arabica’s.