Jamaica to benefit from Coffee futures

Coffee prices referenced on the commodities market are trading near two year highs.

Prices are up 50 per cent since lows of 2019 on news of an expected drop in production going forward, while at the same time met with increased demand from developed nations for coffee.

“World exports are expected down 4.7 million bags to 115.4 million primarily due to lower shipments from Brazil and Honduras,” stated the Coffee: World Markets and Tradereport published this month by the US Department of Agriculture. “With global consumption forecast at a record 166.4 million bags, ending inventories are expected to slip 400,000 bags to 35.0 million.

The report stated that coffee production for 2019/20 is forecast 5.3 million bags (60 kilogrammes) lower than the previous year to 169.3 million, primarily due to Brazil’s Arabica trees entering the off-year of the biennial production cycle.

Arabica coffee futures are now at US$1.31 from just shy of the US$1.38 52 week high but far from the low of US$0.86. It follows on a series of measures which affected demand and supply.

It matters, as the commodity futures give a guide to the directional flow of pricing of most coffees, even those that do not trade on the exchange like luxury Jamaica Blue Mountain. The entire crop of JBM can fit into less than a day’s production in Colombia, so the island’s crop does not affect demand or supply. Buyers in Japan however which accounts for some 70 per cent of total sales of JBM beans will be less likely to pay a premium for JBM if coffee demand overall is down.

“The Japanese are buying again but the prices are not that great,” said a Spokesman for a large farming brand in the Jamaica Blue Mountains.

The data for this year’s total exports of Jamaica Blue Mountain are not yet disclosed.

China continues to grow its consumption with the growth of Luckin Coffee formed in 2017 and listed this year. It continues to add several stores a day now at some 4,280 up over 200 per cent year on year, at the time of this report. It is now the largest chain in China surpassing Starbucks which operates some 4,100 sores in China.

 

dav

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