Robusta coffee prices have gained 6.95% on the week to trade at $2,170 per metric ton, making it one of the best performing commodities.
Prices have been rising on concerns that poor weather conditions in Vietnam and Indonesia will affect crop production this year. Vietnam is the world’s largest exporter of Robusta beans, followed by Indonesia. Dry weather in Vietnam during the growing season is expected to lead to smaller beans. This was followed by late rains that delayed harvesting by a month, which is expected to result in lower quality beans. Poor conditions in Indonesia may continue, with Indonesia’s weather bureau predicting rain until June. The International Coffee Organisation (ICO) expects the adverse weather conditions to reduce production slightly in Vietnam but significantly impact Indonesia. Total production for Robusta beans may rise by just under one million bags, or around 2%, to 50.5 million bags. This compares to a 15% increase for Arabica beans. Production of Arabica beans, which are more expensive and considered to be of higher quality than Robusta beans, are dominated by Brazil and Columbia. Robusta beans are generally used for roasted ground coffee and may be mixed with Arabica to make a cheaper blend. Farmers may prefer growing Robusta beans despite the lower price as the crops produce a yield in around two to three years, whereas Arabica plants may take four to five years before producing a yield. Robusta can also be planted in more locations than Arabica as they are more resistant to tropical heat and disease and can be grown at lower altitudes. Robusta beans account for a third of the world’s coffee production. The impact of the weather conditions on this year’s crop yield may see the price of Robusta supported in the near term. The ICO believes that ‘tight supply situation, buoyant consumption and low stock levels are factors likely to continue to support prices
Prices have been rising on concerns that poor weather conditions in Vietnam and Indonesia will affect crop production this year. Vietnam is the world’s largest exporter of Robusta beans, followed by Indonesia. Dry weather in Vietnam during the growing season is expected to lead to smaller beans. This was followed by late rains that delayed harvesting by a month, which is expected to result in lower quality beans. Poor conditions in Indonesia may continue, with Indonesia’s weather bureau predicting rain until June. The International Coffee Organisation (ICO) expects the adverse weather conditions to reduce production slightly in Vietnam but significantly impact Indonesia. Total production for Robusta beans may rise by just under one million bags, or around 2%, to 50.5 million bags. This compares to a 15% increase for Arabica beans. Production of Arabica beans, which are more expensive and considered to be of higher quality than Robusta beans, are dominated by Brazil and Columbia. Robusta beans are generally used for roasted ground coffee and may be mixed with Arabica to make a cheaper blend. Farmers may prefer growing Robusta beans despite the lower price as the crops produce a yield in around two to three years, whereas Arabica plants may take four to five years before producing a yield. Robusta can also be planted in more locations than Arabica as they are more resistant to tropical heat and disease and can be grown at lower altitudes. Robusta beans account for a third of the world’s coffee production. The impact of the weather conditions on this year’s crop yield may see the price of Robusta supported in the near term. The ICO believes that ‘tight supply situation, buoyant consumption and low stock levels are factors likely to continue to support prices
source:
http://www.marketmoves.com/category/Commodities-News/Coffee-Robusta-Market-Moves-201101170004/
