Brazil Pours More Cold Water On Coffee Market
Undated (AP) _ Brazilian coffee chief Jorio Dauster made a big splash in London this past week, dousing the world coffee market with cold water when he dashed hopes for a rapid return to international price supports.
Coffee futures prices skidded to new 14-year lows in each of the four trading sessions that followed Dauster’s remarks to reporters covering the International Coffee Organization’s two-week London meeting, which ended Friday.
Coffee for December delivery on New York’s Coffee, Sugar & Cocoa Exchange settled at 70.39 cents a pound Friday, representing a 12.7 percent decline from 80.60 cents a week earlier and a 38 percent drop in the near-month delivery price since June 30, the last trading session before the International Coffee Organization suspended export quotas and coffee became a free market.
A slight decline in retail coffee prices during August suggests the collapse of green coffee prices may be trickling down to U.S. consumers.
Dauster is the president of the Brazilian Coffee Institute, representing the coffee-growing industry in Brazil, the world’s largest producer.
On Tuesday, he told reporters he saw no chance for a return to international price supports before March 15, when the new Brazilian president takes office.
The International Coffee Organization is composed of 74 of the world’s largest coffee-exporting and coffee-importing nations. The group was founded in 1963 to stabilize world coffee prices by limiting the amount of coffee that producer countries could sell to consumer countries.
The group’s latest six-year agreement fell apart July 3 when the producers, led by Brazil, balked at demands by the consumers, led by the United States, for increased availability of top-quality coffees and a halt to sales of coffee at discount prices to nonmembers.
Few observers expected these differences to be ironed out at the meeting in London, but Dauster’s remarks seemed to further weaken the chances for an accord.
On Friday, Dauster was criticized by Brazilian coffee growers for rejecting a proposal aimed at restarting negotiations toward a new coffee agremeent because of implications that it would include export quotas.
The International Coffee Organization eventually adopted a resolution aimed at restarting negotiations but analysts said the document contained nothing of substance.
″They put their signatures on a goodwill declaration to meet in the near future when conditions are right,″ said Bert Ruiz, a vice president of the futures brokerage Balfour Maclaine Corp.
Analyst Arthur Stevenson of Prudential-Bache Securities Inc. said any agreement that did address the issues dividing consumers and producers was merely ″window dressing.″
Meanwhile, retail coffee prices may be dropping, but not nearly as quickly as the prices paid by roasters for green coffee beans.
The Bureau of Labor Statistics reported last month that the average retail price of ground roast coffee fell 1.7 percent in August to $3.171 a pound from $3.225. The drop nearly offset a 1.8 percent increase in July.
George Boecklin, president of the National Coffee Association, an industry trade group, would not speculate on whether the government’s Oct. 19 report on consumer prices would show a further decline.
He said changes in retail prices typically lag behind green coffee prices.
″It takes time for these prices to work through the pipeline,″ he said.
Market analysts said U.S. coffee roasters are just beginning now to buy in large quantities for the winter season after working through their inventories.
Here are some commodity price trends during the past week:
Wheat and corn futures advanced but oats and soybeans retreated, soybeans for the fourth week in a row.
Wheat for delivery in December settled Friday at $4.11 1/2 a bushel compared to $4.07 1/4 a week earlier; December corn rose to $2.38 a bushel from $2.33; December oats notched back to $1.43 1/2 a bushel from $1.44; November soybeans slipped to $5.67 1/2 a bushel from $5.68.
Livestock and meat futures had a mixed week on the Chicago Mercantile Exchange.
October live cattle fell to 71.67 cents a pound from 71.92 cents; October feeder cattle improved to 82.97 cents a pound from 82.95 cents; October hogs rose to 46.15 cents a pound from 43.80 cents, marking the fourth consecutive weekly gain for that market; February frozen pork bellies dipped to 47.12 cents a pound from 48.22 cents.
Precious metals retreated on New York’s Commodity Exchange with gold turning lower after rising for three weeks.
October gold fell to $363.70 a troy ounce from $367.20; December silver sagged to $5.19 a troy ounce from $5.31.
Energy futures retreated on the New York Mercantile Exchange.
West Texas Intermediate crude oil for November delivery dropped to $19.87 a barrel from $20.13; November heating oil slipped to 58.18 cents a gallon from 59.96 cents; November unleaded gasoline slumped to 54.80 cents a gallon from 58.22 cents.
End Adv Weekend Editions Oct. 7-8