An Overview: The World Coffee Market

An Overview: The World Coffee Market - As coffee is by far the most popular drink of our time, with no known answer at this time, it goes without saying that the coffee market itself is a very competitive industry. With the large number of coffee brands, companies should look not only good prices but with quality assurance to demonstrate that their coffee is aromatic and flavorful. Statistics show that there is a trade sector is more active than the coffee market, it's oil, and therefore can hardly imagine the magnitude of transactions and the number of digits of the benefits of the coffee market.

World Coffee Market

The world coffee market, after a period of high prices from 1994 to 1999 that drove the expansion of production has entered a period of very low prices, almost 50 cents per pound in mid-2001, the highest level lowest since early 1970. The low prices reflect an increase in production, led by expansion in Brazil and Vietnam, which has outpaced the growth in demand.

When the demand for coffee is growing, but very price-elastic, the possibility of several years of low prices of major concern for producers in Latin America, Africa and Asia. Importers worried, because they are afraid that the price has become so low that farmers have no incentive to produce significant quantities of better quality coffee that consumer demand.

Between 2000 and 2001, associations of producers have tried to raise prices through the maintenance of stocks equal to 20 percent of exports in each participating country. Twenty countries have signed, but the initiative failed, because only in Brazil and Costa Rica to be certified to stock, and the number of signatories shall be paid only in words the effort. Producers in Central America now is to develop a triage system reform defective beans in export markets. Research of the International Coffee Organization (ICO) provides that this system, if fully utilized, could raise prices of 2 cents per million 60 kg bags from the market.

Ultimately, only a reduction in production can stimulate a recovery in coffee prices. With prices in mid-2001 below the production cost of most if not all, countries, rationalization of production will be phased in over several years. A severe frost in coffee-producing areas in Brazil is the only scenario of a short-term shock to prices and the possibility of that happening in 2001 moves away quickly.

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