Colombian coffee growers are not immune from the fluctuations of the international markets which have recently become more turbulent, said Colombia’s coffee federation.
According to Andres Valencia, commercial manager of Colombia’s National Federation of Coffee Growers, speculators in financial markets have put $5.5 billion in the coffee futures market which could have led to the price of coffee reaching its historic high of $3.32 a pound on May 3, equalling the price of April 14, 1977.
Financial publication Portafolio reported that nervousness about the European debt crisis and the weakness of the U.S. economy is leading speculators to keep their investments in other assets such as gold. According to Valencia, this type of investor has liquidated the coffee futures markets with some $1.5 billion and since May, the price of a pound of coffee has dropped by between $0.50 and $0.60.
The International Coffee Organization published the price of Colombian smooth at $2.83 a pound. Despite the fall, the price remains high; a price less than $2 a pound would be worrying.
“Before they [futures investors] were betting on coffee rising in the market, while today they are betting on a fall,” said Valencia.
Jose Sette, director of the International Coffee Organization said the revaluation of currencies such as the Brazilian real, the Colombian peso and the Indonesian rupiah have drawn attention to the decrease in the price of coffee in the world market.
The future of Colombian coffee is bright, taking into account basic facts, such as the global increase in coffee consumption and the increased supply of smooth arabica in the market.