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Coffee, cocoa will lead price decline in ’06: EIU
Nov 7 2005
Coffee, cocoa, soybeans and palm oil will post the biggest declines in prices for food commodities next year because of expanding production, forecasts the Economist Intelligence Unit (EIU). Sugar, corn and sorghum will gain , it said.
Prices for Arabica coffee will drop on an average to almost 21% next year to 89.5 cents a pound, while Robusta coffee will fall almost 13% to 43.4 cents a pound, the London-based research arm of The Economist Group said in a report on Monday.
“The outlook has turned more bearish in anticipation of a return to global oversupply,” the EIU said in the report. “Assuming no adverse weather among major producers, especially Brazil and Vietnam, downward pressure on prices will increase.” Prices for Robusta coffee, bitter-tasting beans used mainly to make instant coffee, have gained 32% this year on the Liffe exchange in London. Mild-tasting Arabicas are preferred by specialty roasters such as Starbucks Corp. Arabica prices are little changed this year on the New York Board of Trade.
Cocoa prices will drop almost 12% to 61.6 cents a pound next year, the EIU said. There are “good growing conditions” in West Africa, which includes suppliers such as Ivory Coast, the world’s biggest producer of the bean.
Soybean prices will decline 11% to $235 a metric tonne next year, while palm oil prices will drop 11% to $362 a tonne, the EIU said.
Sugar will post the biggest gain next year of any of the 16 food commodities tracked by the group, rising 12% to 10.75 cents a pound.
“World stocks will drop over the next two or three years as consumption continues to outstrip production,” the EIU said. Sorghum prices will increase 5.5% to $106.3 a tonne next year and corn prices will gain 5.3% to $102.5 a tonne.
—Bloomberg
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