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Coffee Futures Fall
- 2. Drought has come to the coffee producing region of Colombia.
- 3. When El Niño makes it rain in California it can stop the rains in Colombia which is hurting coffee farmers.
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- 5. In response Colombia will boost exports by allowing sales of lower quality coffee according to bloomberg business.
- 6. coffee futures fell the most in seven months after colombia announced measures that will increase exports, spurred by the plight of farmers in the country who are dealing with drought conditions linked to the el nino weather pattern.
- 7. the national committee of coffee growers will relax restrictions on purchases from growers to boost exports, it said late thursday in a statement.
- 8. as much as 18 percent of the current crop is lower quality, compared with a typical level of about 10 percent, it said.
- 9. Colombia is the third largest coffee producer after Brazil and Vietnam and the second ranking producer of high quality Arabica coffee after Brazil.
- 10. Vietnam produces Robusta coffee which goes into instant coffee and caffeinated drinks.
- 11. The immediate effect of this announcement is the fear that Colombia will dump excess coffee on the market making coffee futures fall.
- 12. Unless They Cannot Pick All the Coffee
- 13. Traders expect a glut of high quality coffee which is why coffee futures fell.
- 14. But there are other factors aside from the decision to sell more Arabica coffee of lower quality.
- 15. They need to find coffee pickers to pick the beans and that is an issue today in Colombia.
- 16. It turns out that there is a shortage of farm workers to pick coffee beans in Colombia.
- 17. There is a highway construction program that is luring workers with higher wages and steady instead of seasonal work.
- 18. producers of the famed arabica beans brewed by companies including starbucks corp.
- 19. are paying workers twice what they received two years ago.
- 20. still, the labor shortages are leaving coffee beans on trees longer, allowing them to fall to the ground, where beetles can bore into the cherries.
- 21. “for every three workers we need, we have two,” said juan david rendon, head of the andes coffee cooperative, whose members have about 35,000 hectares (86,000 acres).
- 22. “infrastructure in Colombia has been demanding a lot of manpower.”
- 23. farmers are now paying laborers as much as 600 pesos (21 cents) a kilo that they pick, rendon said in a telephone interview.
- 24. construction has replaced oil and mining as the main motor of economic growth in the andean nation.
- 25. farm labor may become even more scarce when work begins on president juan manuel santos’ $17 billion highway program known as 4g, which aims to build 1,300 kilometers of new roads by 2018 and cut travel time between industrial centers and ports.
- 26. Colombia has been hit hard by the fall in oil prices as it is the third leading importer into the U.S.A.
- 27. The Colombian peso has fallen dramatically against the dollar and the economy has weakened.
- 28. The highway construction programs are part of a stimulus package such as other nations have been using.
- 29. At least for this harvest season coffee farmers may have trouble getting off the coffee off the mountain, dried and sorted to remove diseased beans before storage and shipment.
- 30. Anyone who knows how to trade commodities knows that it comes down to supply and demand.
- 31. Allowing farmers to sell lower quality beans may increase supply but only if they can get the crop picked and to market.