Nina Return Threatens Coffee Crop Outlook
DOW JONES NEWSWIRES
Coffee prices could soar higher if climatic phenomenon LaNina further pinches the already-constrained supply of coffee beans produced inCentral America and Columbia, analysts and weather organizations told Dow JonesNewswires Tuesday. The price of coffee on the Intercontinental Exchange has already soared by25% over the past 12 months as severe flooding hindered crop development. Thereturn of La Nina--a periodic climatic phenomenon that brings more rain to thewestern pacific and which devastated the production of agricultural crops inAustralia, South America and the U.S. late last year--is now threatening tosend prices higher once more. Colombia is a top producer of Arabica beans. "Bad weather has resulted in stunted Colombian coffee production and this isa major reason behind the current elevated price environment," Keith Flury,senior soft commodity analyst at London-based Rabobank said. "If weatherconditions continue to reduce expectations about the 2011-12 Central Americanand Colombian coffee crop, prices could easily retrace to the 2011 highs," headded. Colombia's coffee federation in recent months has blamed the heavier thanusual rains for a drop in coffee production, and the last devastating rainswiped out huge swathes of agriculture and generated an increase in ahumidity-induced fungus known as roya which damaged some crops. And if weather forecasters are correct, there is more rain on its way. The U.S. National Weather Service predicts la Nina to gradually strengthenand continue through the upcoming winter. The British Weather Services (BWS)also shares the same view. "We expect La Nina to return over the coming few months, peaking in January,maybe a little weaker than last year but there is good evidence of a returnspike," said Jim Dale, senior meteorologist at BWS. "That projects intopotentially very wet conditions for northern parts of South America and CentralAmerica." At 1510 GMT, ICE coffee was down 61 cents at $2.48 a pound.
