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World coffee prices: a market in denial?

From the March 2013 issue.

Weakening prices have led to a standoff between some traders and producers. After four months of unchanged differentials, a coffee price rebound may be coming.

Coffee market pricesFollowing widespread reports of failing crops in Latin America, some producers are dismayed that ICE futures prices in New York show little indication of recovering.

The rust outbreak, which is affecting an average of 20 to 30 per cent of the entire Central American coffee belt, has come at a time when Latin American farmers are worried about the future of their industry. As tree populations are getting old, unproductive and lower yields have left smallholder coffee farms in a state of semi-abandonment, and prices are hovering well below the cost of production at around US$1.80 per pound.

So why – some producers are asking – with production in a downfall and buoyant demand, is the market defying against higher price?

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