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  • QA 049
    Question:
    Why is it said (September 2005) that prices have recovered when in fact they are falling?
    Background:
    What has happened with coffee prices? What are the reasons at national and international level that make people say the prices had recovered? Prices even dropped down.
    Asked by:
    Extension Agent - Colombia
     
    Answer:

    Even though this website does not offer a market or price analysis service we can nevertheless offer a few comments and suggestions.

    Compared to the years 2001/2004 prices are currently (September 2005) higher but, not as high as they were a few months ago. And, some would argue, even then prices were not at satisfactory levels. 

    The low prices of the last few years are the cause of what has become commonly known as 'the coffee crisis' and we consider that, based on the present performance of the market, it cannot be argued that 'the crisis is over'. Whether the current weakness is temporary or not is a matter of opinion and it is not for us to speculate as to future price developments. Furthermore, as higher prices usually lead to higher production we would suggest that over the long run only growth in consumption can sustain satisfactory price levels. And, as was made clear at the recent World Coffee Conference in Salvador - Brazil, there are clear differences of opinion as to where approximately the 'right price level' to achieve this lies. See  www.worldcoffeeconference.com 

    The ITC- FORUM 2/2004 article (in English, French and Spanish) in the blue-menu-drop-down called Articles and Papers on the front page of our own website - www.thecoffeeguide.org - discusses some of the issues surrounding the coffee crisis, whereas for more insight in market and price movements we suggest you visit the website of the International Coffee Organization - www.ico.org. Click on 'Executive Director's Office' to find regular monthly market reports and commentary, also in Spanish.

    Posted 03 October 2005

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