Head of operations at the International Coffee Organization (ICO) said on Friday that the peace talks announced by Colombia’s president Juan Manuel Santos are unlikely to affect the international coffee business.
Jose D. Sette told Colombia Reports that “internal civil strife does not appear to have affected Colombian coffee in a significant way in the past, so there is no reason to suppose that peace talks would have any impact on coffee exports now.”
Colombian coffee exports had fallen in recent years due to “weather problems” that affected production. Exports fell from over 11 million bags in 2007 to just over 7 million bags in 2010, but have begun steadily improving, reaching just over 8 million bags in last years’ crop.
Despite the reduced production volume the country has maintained third place in world exports according to data from the ICO. Sette says things are looking up for Colombian exporters again and “production and exports have been recovering in recent months.” Roughly 9 million bags are expected to be harvested in 2013, with the expected help of weather influenced by El Niño boosting production.
This production rebound has made Colombian coffee dealers become more aggressive in their efforts to sell beans and, according to newspaper the Business Recorder, U.S. traders reported that Colombian traders are “now fighting to get the market share back.”
Unfortunately at the moment coffee trading in the U.S. is slow due to the “summer doldrums” caused by traders taking holidays and generally low premiums. These low prices have caused many producers and exporters to sell their crop to ICE Futures, a U.S. financial company that operates internet-based marketplaces and trades future and over-the-counter contracts.
According to ICE, Mexico, Honduras, and Peru are at a par while Colombia is at a 200 point premium, Ecuador is at a 400 point discount and, effective with the March 2013 delivery, Brazil will be discounted at a massive 900 points.
The ICO monthly report said that coffee prices in general increased by 9.5% at the beginning of July, compared to the month before. This recovery follows nine consecutive months of price falls. However in mid-July, the ICE Futures price begain falling steadily again. The ICE premium for Colombian good-quality beans has held steady in the last week.
Overall, it looks like Colombian coffee exporters can hold their own against a strengthening world market and have little need of a helping hand from the peace talks.
