Global coffee prices to stay bearish: ICO

The bearish trend seen in international coffee prices last month is likely to continue in April as well, the International Coffee Organisation (ICO) said in its monthly market report.

The London headquartered body, comprising coffee experts from the European Union and the US, frames guidelines addressing sector-wise issues covering production trends and consumption patterns in the coffee chain.

In March, the ICO composite indicator registered a fall of 3.93 per cent from a month earlier at $1 a pound. "Prices were relatively more volatile in March than in the first two months of 2007. The behaviour of the market at the beginning of April indicates a return to this downward trend," the report said, quoting Executive Director Nester Osario.

Osario said the downward correction in prices was more pronounced in the case of arabica than the robusta variety.

However, the fall in prices was not worrisome as the long-term outlook for the commodity remained bullish, he said.

"The supply and demand situation remains favourable to the maintenance of a firm price trend," he added.

Osario said the world output for 2007-08(October-September) is pegged at 112 million bags (1 bag=60 kg). For the current season, global output is pegged at 120.5 million bags, he said.

Arabica output during the season is likely to register a rise of 11.94 per cent from a year ago at 78 million bags, while robusta is seen to increase by 6.58 per cent to 42.4 million.

Osario also said that the El Nino phenomenon has not had a major impact on the coffee crop in South Asia, so far.

"With regard to the El Nino phenomenon, observations made in March indicate that its intensity has weakened," Osario said.

El Nino implies an abnormal warming of surface waters of the Pacific Ocean, causing weather disturbances, thereby impacting rainfall.

Exports during February represented a marginal decrease of 3.08 per cent at 9.19 million bags, the report said.

For the first five months of the year, coffee exports were at 39.38 million bags, up from 32.92 million bags a year ago.

This year's global consumption is pegged at 120 million bags as against 118 million a year ago. "Although the consumption in traditional importing countries such as Germany, the UK and the US is showing signs of stagnation, it is growing at a dynamic rate in a number of emerging economies, and in some non-member countries," Osario said.

Osario identified Algeria, Australia, Canada, Russia, Turkey, Ukraine and Korea as the new markets to be tapped.