Arabica Coffee Prices to Rise

Arabica coffee futures are expected to rise by the end of the year, boosted by a weak U.S. dollar and the prospect of a cyclically smaller Brazilian crop in 2009/10, a Reuters poll showed.

 The median forecast of 21 analysts and
traders polled by Reuters was for an 8 percent rise in the cost of
arabica beans on the U.S. ICE Futures by the end of 2008 from the end
of 2007.

Robusta was seen below current levels
but still up nearly 20 percent year-on-year.

The ICE front-month arabica futures
contract was pegged at $1.40 per lb by the end of the third quarter
and $1.475/lb by the end of 2008, up from $1.362/lb at the end of
2007, according to the median estimate.

Key factors expected to drive the
coffee market included rising energy prices and the state of the
world's economy, poll results showed. Global production for the
2008/09 crop year was pegged at a median of 138.25 million 60-kg
bags. World consumption for 2007/08 was projected at 125 million bags
and for 2008/09 at 128 million.

The International Coffee Organization
has estimated 2008/09 world coffee production around 128 million
bags, and revised its 2007/08 estimate at 118.2 million bags.