Central American Coffee Production May Drop as Leaf Rust Spreads
2013-01-24 19:53:56.883 GMT By Andres R. Martinez, Andrew J. Barden and Isis Almeida Jan. 24 (Bloomberg) -- Coffee output in Central America and Mexico, which account for 14 percent of the worlds bean output, may fall as a disease affecting foliage spreads. Guatemala, Central Americas second-biggest coffee grower,may lose a third of its crop because of leaf rust, PresidentOtto Perez Molina said today in Davos, Switzerland. The crop inCosta Rica may be 30 percent to 40 percent smaller because ofthe fungus, President Laura Chinchilla said in a separate interview in Davos. Coffee exports from Honduras, the regions biggest grower, will be down 767,000 bags due to leaf rust also called roya, the Honduras Coffee Institute, or Ihcafe, said. Coffee production in Mexico and Central America will be 19.7 million bags in the 2012-13 season that started Oct. 1, theInternational Coffee Organization estimated in a report on Jan. 9. That is 2.8 percent lower than the previous forecast of 20.3 million bags, data from the London-based group showed. Farmers around the world will harvest 144.1 million bags, the ICOestimates. A bag of coffee weighs 132 pounds. The roya situation and the potential that next seasonscrops may be impacted is certainly a current focus of themarket, Keith Flury, an analyst at Rabobank International in London, said by e-mail today. If the Central American crop is lower this will support coffee prices. Coffee Futures Arabica coffee futures traded on ICE Futures U.S. in New York declined 37 percent last year, the most in more than a decade, partly because of a bigger crop in Brazil, the worlds largest grower, and rising stockpiles. The beans favored by Starbucks Corp. were the worst performing commodity in the Standard & Poors GSCI gauge of 24 raw materials last year. Prices are up 1.9 percent this year. Guatemalas government will help growers cope with losses from the foliage-attacking disease, Perez Molina said. Costa Rica will provide aid to farmers affected, said Chinchilla. The disease will probably spread throughout the region as last years slump in prices reduced farmers income, limiting their ability to pay for chemicals to treat crops, said Stefan Uhlenbrock, an analyst at F.O. Licht GmbH in Ratzeburg, Germany. The minister of agriculture briefed us at the last meeting and told us about the impact, which could be very big,Perez Molina of Guatemala said. The government will help farmers, especially small-and medium-sized ones. The damage in Costa Rica may be very high, Chinchilla said. The Costa Rican Coffee Institute, known as Icafe, cut the nations production estimate to 1.648 million bags from a previous forecast of 1.714 million bags, it said on Jan. 4. Mexico and Nicaragua are also battling the disease.
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ICE Coffee Futures Plunge 4.9 Pct on Heavy Volume
Arabica coffee futures plunged Tuesday pressured by speculative selling, after the easing of the index fund buying. The nearby contract for March delivery fell 7.70 cents to close at 148.60 cents a pound. The volume reached 41,112 lots. The activity was boosted by switches. The nearby switch widened slightly to end at -2.90 cents. A weak real in Brazil and the technical performance added weight on the prices. Last Friday COT report confirmed that the index funds added 8,559 lots as of last Tuesday, and the funds covered 7,779 shorts, evidencing some of the reasons of the recent rally. On the technical aspect, the breaking of the last week’s lows triggered more liquidations and sell stop orders. Selling related to arbitrage trading could add more pressure on the New York market. The March NY-LDN narrowed to $0.607 from $0.667 last Friday. After the opening pressure on the March/May structure yesterday morning which appeared to be weakened on the back of rolling of Managed Money longs the board adopted a more orderly flow of business. Replacement style buying from industry recovered some of the opening weakness as the market lifted to test origin which appeared scale from 1980 in March as the market established the range. The environment in Vietnam has recorded little change of the recent past with differentials holding firm and the local market consistently bid which appears to have encouraged farmers to hold stock. Exporters are working to accumulate stock which is adding to the local support as the market quickly begins to think ahead to the New Year which starts on the 8th February. Shipments numbers are expected to be good for January with a continued build in non-certified positions in Europe. London confined itself to another tight range into the second part of the session with the action edging nearer the origin interest above the market. Influenced by the move lower in New York prices gave ground right back to the option strike which triggered some delta stops before working back to hug the strike price, before easing again into the closing sequence. Action has broken the momentum in today’s action. ICE Coffee Warehouse Stocks were up 2,886 to 2,608,467. Pending Grading: 43,604 bags. |
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