Issue link: http://read.dmtmag.com/i/763665
STiR coffee and tea 27 SALIM ARIA NOUSH (Ltd) Expertly Brings You The Best Of Iranian Teas and Herbals. ISO 9001:2008 Certificate. I ISO 10002:2004 Certificate. I HACCP Certificate. I HALAL Certificate. I info@ salimaria.com Tel : +98 21 5589 4000 I Fax : +98 21 555 900 15 visit salimaria.com In March after coffee futures hit new lows the large index funds, what we call "passive investors" came back into com- modities in a big way, explains Albert Scalla, vice president at INTL FCStone Financial, in Miami. "Suddenly 2016 became a positive for commodities and in the commodities basket the speculative side of the market came in hard for coffee," he said. Reports of trouble with supplies of the higher quality coffee from Colombia drove up prices but that prediction ultimately proved false. "Colombia turned in a very good crop," said Scal- la. "Then two mini-freezes in Brazil affected investor sentiment, but did little damage. Conilon became a factor as unfavorable weather in Vietnam could possibly take out 2-3 million bags at the same time the drought in Brazil has brought production down to 10 million bags (See Brazil, Pg. 42). Since then the weather has turned for the better, he said. Unpredictable predictors Scalla said the #1 reason for coffee volatility is the lack of credi- ble information. "That is our fault, the industry lacks transparen- cy in logistics. The numbers that suppliers report are sometimes in question. Warehouse stocks of green coffee are a question mark. Stocks at main ports continue to increase as export totals fall. No one really knows how much coffee is produced or even how much is consumed," observes Scalla. "Are we really growing on a 60-kilo bag basis or is con- sumption really only growing per cup or by aggregate value," asks Scalla, citing National Coffee Association/StudyLogic $100 USD equals: R$ 342 Brazilian Reals $100 USD equals: £ 80.29 British Pounds $100 USD equals: 317,602 Colombian Pesos $100 USD equals: € 94.36 Euros $100 USD equals: 1,352,750 Indonesian Rupiah $100 USD equals: 2,275,000 Vietnamese Dong Comparing Currencies *as of Nov. 25, 2016 data showing a steep year-to-year decline in single-cup servings per person. Capsules hold a small fraction (6-10 grams) of the amount of coffee used (and often wasted) in drip brewers. Big increases in the number of single-serve coffee drinkers signals an overall decrease in coffee processed by roasters. "Essentially we have to question everything," he said. "That is what creates uncertainty in the markets and uncertainty contributes to risk and risk eventually translates to volatility in prices," he said. Coffee prices Arabica futures last traded above $2 per pound in October 2014, a price some argue is essential for the long-term sustain- ability of producers. The all-time high of $3.0625 was reached