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INTL FCStone on the role of the institution

From the June 2015 issue.

INTL FCStone puts forward the case for better production reporting and why accuracy is possible.

Since the global coffee price crisis of the late 1990s, when fundamentals of supply/demand sent coffee futures down to historic lows, there has been an increased need for accurate and transparent statistics.

The need was highlighted by the International Coffee Organization (ICO) in the International Coffee Agreement (ICA) 2007: “The Agreement will strengthen the ICO’s role as a forum for intergovernmental consultations, facilitate international trade through increased transparency and access to relevant information…”

The ICA 2007 also included the new provision of: “Strengthening statistical activities to include market structures, niche markets and emerging trends as well as quantities and prices of coffees relating to factors such as different geographic areas and quality.”

As the coffee market supply/demand balance shifted during the 2000s and took prices to multi-year highs in 2011, again fundamentals were of increased focus.

However, in the intervening years, it appears that discrepancies have become even greater now than they were before, leaving the market in a state of confusion and crying out for transparency.

The persistently varied numbers, which have been reported for a prolonged period of time, have not only confused the market, but have also triggered apathy.

The industry is fed up with the wide range of figures being reported, some days deciding to believe certain numbers and other days just not paying any heed to them.

Hugely differing numbers were once reserved for the Brazilian crop only, with production estimates generally ranging by about 5 million bags across various reporting bodies. Now, for the impending Brazilian 2015-16 crop, the range is about 10 million bags.

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