The Learn About Futures Insider for October 6, 2011: Coffee ( Part 3)

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Among the top importing countries, the following table shows imports in 1000 60 kg bags of green coffee for the select years:

***data courtesy USDA

Top domestic consumption in 1000 60 kg bags of green coffee is distributed in select years as follows:

***data courtesy USDA


Key terms for the coffee market include:

Green beans – raw, unroasted coffee beans

ICO – International Coffee Organization – a group of producing and consuming nations who work together on coffee related issues and marketing. According to their site, “ICO exporting Members account for over 97% of world coffee production and its importing Members are responsible for around 80% of world coffee consumption.”
Key Uses

Drip, espresso, instant, decaf – coffee is consumed as a beverage hot or iced. Beans are roasted and usually ground to deliver a caffeinated treat while the fruit is discarded or used as fertilizer.

Key Concerns

International Trade Issues – Since coffee is grown in specific regions of the globe, the political situation in countries which produce it as well as trade policies in import countries can have an effect on the supply and demand of beans. The lifting of the US trade embargo against Vietnam is often cited as a catalyst in the rise of Vietnamese production and trade of coffee. Demands for fair trade coffee can also directly affect smaller farmers by guaranteeing them a minimum price per pound of coffee.

Environmental Impact – Coffee plants can be cultivated in shade under a forest canopy or with sun cultivation which may speed cherry ripening and is said to increase yields. The shade grown varieties are often considered “organic” since sun cultivation is achieved by clearing forests and may require additional water, fertilizer, and pesticides. Pressure on some modern sun cultivating coffee farms to change methods can be great.

Weather – Arabica coffee does well with evenly distributed rainfall throughout the year to a total of 40 to 59 inches. Drought can be devastating. Coffee plants do not do well with frost, either. Sunshine or lack thereof can be important after ripening for dry method processing as well since drying cannot take place in rainy weather. Heavy rains during the key blossoming times may impact yields if flowers are damaged.

Disease – Nematodes, coffee berry disease, hemileia vastatrix – like most agricultural products, coffee plants have their share of pests and disease. The Robusta variety has natural resistance to many of these while Arabica requires a bit more care.

Consumer Demand – Whether a shift to coffee consumption in traditional tea drinking cultures or an economic recession, traders are always looking for indications of overall demand.

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