The future price of coffee has reached its lowest level in the last 5 months in response to an in increase in the production of grain in Brazil.
The slowdown in demand in the northern hemisphere due to the arrival of summer and the grain harvest season in Brazil in July explain part of the reduction in future prices on the international market.
The rise in coffee futures corresponds to expectations of lower production in Brazil and increased demand in the U.S., China and Europe.
From a report by Anacafé at the end of April 9th, 2014:
Coffee prices in "C" contracts closed at higher prices. The prices behaved in a volatile fashion. Liquidations in May contracts and transfers of positions to months further off, caused the initial decline.
With the increase in premiums in their contracts large buyers are guarding against uncertainty over the Central American harvest volume affected by rust.
Terra.com.co reports: "The premium for Arabica hard bean washed coffee (HBMC) from Peru stored in the United States rose to an average of 14 cents over futures contracts observed in the U.S. last week, its highest level since September 2011 and a sharp increase from the 11 additional cents in late July ... ".
This upward momentum comes not only from lower yield forecasts by main world producers of coffee, but also speculation. Dollar weakness encourages financial traders to hide their capital into commodities and coffee is one of the most sought after for future operations.
The CABI Commodity Price Index is an indicator of Guatemalan trade terms, composed of both local and international variables.
They take the prices traded on the stock exchange for raw materials that are important to the trade balance and they are weighted based on their importance, according to official data from the Banguat. The most important components are coffee (exports) and oil and derivatives (imports). In total, ten commodities representing 30% of Guatemalan commerce are used.
In the world of financial markets the price of futures contracts has been increasing at an accelerated rate. The best examples are primary materials whose prices have been affected directly or indirectly by high petroleum prices.
In general terms, these contracts are valid agreements for the future delivery of a product at an agreed-upon price. All publicly traded contracts for a given month are identical; only the price is negotiated.
CISA Exportadora is a green coffee exporting company based in Nicaragua owned by the Baltodano family who enjoys over 100 years of coffee tradition.
Operates in Nicaragua
Phone: (505) 2270 4414 - (505) 2270 4412