ANCHE QUI SI PARLA DI UN +30%
The International Coffee Organisation who had forecasted in December last year the present Mexico and Central American new crop at 19.7 million bags, have reacted to the prevailing problems of Roya or Leaf Rust disease, with a forecast that this might well result in a dismal follow on crop for the October 2013 to March 2014 crop that shall be 25.4% 35.5% or 5 to 7 million bags lower. This forecast related to the aggressive controls of the disease that shall take place within El Salvador, Guatemala and Honduras, which are the countries in the region most severely affected, which shall result in high percentages of stumping and replanting.
There is no doubt that this issue of Roya is a significant problem for the region and especially so with the prevailing low coffee prices for the present new crop coffees, which is making the finance of controls for Roya more difficult. But there are now various levels of government finance programs in place to assist farmers to fight the problem and one might suggest that this shall assist to limit the losses due for the next crop, but not sufficient in terms of the stumped trees and remaining damaged and weakened trees, to counter the potential for a lower crop. However and looking through the curtain of market manipulative exaggeration of disaster reports, one might suggest that the decline would more likely be at the lower end of forecasts and perhaps only around 4 to 5 million bags.
This decline while most certainly serious for the regions coffee farmers has to be seen in light of the potential for the recovering crops in Colombia that could bring in an additional 2 to perhaps even 3 million bags of fine washed arabica coffees over the next year, along with the clear evidence of significant stocks of unsold arabica coffees in Brazil. Thus while the potential for longer term severe losses in arabica coffee supply from Central America is a fact, it is not as serious an issue for the overall medium to longer term world arabica coffee supply and for the present, the news of these Central American problems is not enough to significantly rally the related New York market. Albeit that one has to expect that in time and by the last quarter of this year, it shall have some effect and should add approximately 30% to the value of the trading range within this market.