COMMODITIES-COFFEE: New U.S. Statistics Could End Price Plunge

LONDON, Nov 18 (IPS) - Coffee has been sliding all week through based largely on technical factors as speculators dumped the commodity.

Traders now believe that the rising market caused by the two frosts and the drought that followed it could have ended and the speculative positions on coffee have effectively been washed out of the system.

But importantly towards the end of the week there were signs that the downtrend had bottomed out and some traders were expecting a slight bounce.

Mid-week, new statistics from the United States gave some support to coffee. U.S. green coffee stocks were reported as falling by 211,000 tonnes by the U.S. Green Coffee Association.

Another factor in the market was the rumour that coffee producers from Central America and Africa, are grouping together to bolster the coffee price, "possibly by implementing a quarterly quota system", said London futures brokers, GNI.

It said that "while the trade may be confident about the free marketers in Brazil bidding against each other and forcing the price down, the Central Americans tend to be a bit more disciplined when it matters".

A study by the British-based analysts Landell Mills released this week will cut consumption by four to five million 60kg bags in importing countries over the next few years. Consumption will only recover by the end of the century, it claimed.

The report implies that consumption will fall by just over seven percent from a price increase of 25 percent, a higher price sensitivity than usually quoted by analysts.

Coffee started the week by closing Monday at 3,400 dollars a tonne for November delivery, 3,400 dollars a tonne for January. Tuesday it ended at 3,320 dollars a tonne for November, 3,348 dollars a tone for January.

Mid-week, the commodity closed on Wednesday at 3,270 dollars a tonne for November, 3,320 dollars a tonne for January. Yesterday, it finished trading at 3,295 dollars a tonne for November, 3,510 dollars a tonne for January.

This Friday evening coffee went into the weekend weaker at 3,250 dollars a tonne for November, 3,280 dollars a tonne January.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service