Bloomberg News

Volcafe Says Robusta Coffee Demand Has Climbed by 5 Million Bags

July 09, 2012

Coffee roasters in emerging markets and the developed world have increased their usage of robusta beans by about 5 million bags, according to Volcafe Ltd.

Roasters in emerging markets are contributing to additional demand of 3 million bags, while the replacement of Brazilian arabica coffee with robusta beans in traditional markets has created additional demand of 2 million bags, the coffee unit of commodities trader ED&F Man Holdings Ltd. said in a report e- mailed on July 6.

Consumption of robusta coffee increased after the price difference between the beans used in instant drinks and the arabica variety, favored for specialty drinks such as those made by Starbucks Corp. (SBUX:US), rose to $1.89 last year, the highest since at least 2008, data on Bloomberg show. Robusta coffee is harvested mainly in Asia and parts of Africa, while arabica beans are grown mainly in Latin America.

“We are just now seeing the concrete evidence of the consequences of a wide arbitrage last year,” the Winterthur, Switzerland-based Volcafe said in the report.

Vietnam, the world’s biggest robusta producer and second- biggest grower of coffee overall, exported more beans than top producer Brazil from February to May, data from the London-based International Coffee Organization show. The Southeast Asian (SHAEAFB) nation also exported more than Brazil in (EWZ:US) June, Volcafe said.

“What these export statistics show us is that in aggregate, roasters are just using more robusta, in both emerging markets and traditional markets,” the trader said. “It is demand-driven, as inventories of Brazilian coffees in Europe and Japan remain high, and robusta inventories remain low.”

Rain Delays

The price difference between arabica and robusta coffee, which had dropped as much as 62 percent this year to a low of 55.61 cents pound on June 14, rebounded to 83.69 cents a pound on July 6, as rains delayed the arabica crop in Brazil.

The current price difference is unlikely to reverse the trend of more robusta demand in favor or Brazilian arabicas in traditional markets, Volcafe said.

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

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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