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Arabica prices rise in July on back of Brazil rains

Coffee farmerThe International Coffee Organisation (ICO) indicator price rose 9.5 per cent in July, following nine consecutive months of price falls. 

The rise was largely attributed to strong growth in Arabica prices, fuelled by concerns over how heavy rains in Brazil would affect the world's largest producer. 

The ICO noted that Arabica prices were nevertheless relatively low compared to the last 12 months. At this time last year, the July 2011 ICO Indicator price was hitting record high levels at 210.36 (US cents), and would continue rising until it hit its peak in September at 213.04. This compares to the July 2012 price at 159.07.

In terms of market fundamentals, the ICO reported that world production in the 2011-12 coffee year is estimated at 131.4 million bags, representing a 3 million bag drop over the coffee year prior. As consumption figures continue to increase, "the supply/demand balance therefore remains relatively tight". Total exports from October to June over the last 10 years increased at an average annual rate of 2 per cent, while consumption was said to have increased as a rate of 2.4 per cent. 

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