Bloomberg News

Colombian Coffee Premium Rises This Week on Supply, Volcafe Says

November 25, 2011

Nov. 25 (Bloomberg) -- The premium sellers are asking for coffee in Colombia, the world’s second-largest producer of arabica beans, climbed this week on limited supplies, according to Volcafe, the coffee unit of trader ED&F Man Holdings Ltd.

Colombian beans for December and January shipments were selling at a premium of 22 cents a pound above the price on the ICE Futures U.S. exchange in New York, data from the Winterthur, Switzerland-based trader show. That compares with a premium of 20 cents a pound the previous week, it said.

“Internal coffee flow remains disappointing,” Volcafe said in a report e-mailed today, adding that the cost of beans was “disconnected” from what buyers were prepared to pay.

Colombian output will likely be 8.5 million to 9.5 million bags next year, Luis Munoz, head of the country’s National Federation of Coffee Growers, said Nov. 4. In May, he forecast 2012 output of as much as 11 million bags. Production this year is expected to be 8 million bags down from 8.9 million bags last year, a spokeswoman at the federation who can’t be identified because of federation policy, said on Nov. 21.

The country’s production will fall as rains caused by the La Nina weather pattern, a cooling of the Pacific Ocean that can affect weather around the world, hurt crops. Rainfall killed 101 people in September and caused mudslides and flooding, according to a government statement on Nov. 21.

“Logistics remain a big challenge,” Volcafe said, adding that access to the Buenaventura port was “quite difficult.”

A coffee bag weighs 60 kilograms or 132 pounds.

--With assistance from Heather Walsh in Santiago. Editors: Sharon Lindores, Nicholas Larkin

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net


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