JAN. 10 (SpillingTheBeans)–Coffee prices have been a disaster for over a year, with aggressive exports out of the largest grower and exporter Brazil giving the FALSE impression that there is plenty of supply going around — there is NOT and we should let ourselves be fooled by what is no more than an illusion. SpillingTheBeans visited regions representing over 65 percent of Brazil’s producing areas last July and consensus was clear, that the current 2015-16
harvest would be one of the smallest in a decade and by optimistic estimates reach between 44 and 45 million 60-kilogram bags. We stand by this figures.
Here’s the latest comments from a number of analysts and reports and what SpillingTheBeans make of these;
Dec 29 2015, 17:28 ET | By: Clark Schultz, SA News Editor
“Coffee prices continue to fall as strong El Nino rains in Brazil help to boost crop yields. The next harvest in the nation is forecast to be up 20% Y/Y at 58M bags. Even with Arabica prices down 28% this year, analysts see another swing lower for coffee in 2016 due to the oversupply situation. Weak currencies in South America are also providing a strong incentive to local producers to sell as much as they can.The trend toward low coffee prices is helping to lift margins for many coffee sellers with U.S. retail prices only down 4% to 5% this year. Companies light on hedging positions are seeing the biggest benefit.Most execs play coy over the bottom line benefit of lower coffee commodity prices, but even Starbucks CFO Scott Maw had to concede that pricing looked a “little bit favorable” during the firm’s last earnings call (transcript).”
Original story: http://seekingalpha.com/news/3007016-coffee-prices-slide-even-lower?uprof=52&dr=1#email_link
SpillingTheBeans has this to say: *No and no and NO: Did you ever even bother to read up on basic crop fundamentals? There is NO over-supply situation, and if you seriously know of additional sources of mass-supply in the order of 10-20 million bags, please do show us the secret warehouses, this comment is another ludicrous attempt by the market to play up extremes of speculations based entirely on wishful thinking and totally lacking any fact-based analysis. Only a few very far and between analysts — all mysteriously backed by and working for not-so-objective trading houses and multinational exporters, are playing up the idea of a bumper crop in the order of 58 million bags — it’s NEVER going to happen, and if you think so, you don’t know Brazil and you don’t know coffee. Sorry!