TRUE reason for high prices of Columbian Coffee, commodity prices june 17 - Of the world's growing appetite for coffee, nowhere has the demand been more voracious than at the upper end. In other words, demand for the higher quality coffee used for espresso and cappuccino has grown at a rate exponentially faster than that of the average drip variety. In most cases, this means Arabica coffee beans. Brazil grows both Arabica and Robusta beans and fills a variety of demand needs. However, high end distributors such as Starbucks tend to seek out specialty varieties of coffee. These are typically high quality beans grown by smaller Central and South American producers. The largest of these producers is Columbia.
Adverse weather conditions caused production to drop drastically in Columbia in 2008 and 2009, hitting a 35 year low of 8.1 million bags at the trough. Many of Columbia's coffee trees were destroyed in 2008 and new trees had to be planted. However, it takes about 3 years for new coffee trees to begin producing beans in an significant amount. 2010 saw a slight rebound in production but still left yields substantially below 20 year averages. Most coffee analyst cite this shortage of high quality specialty beans coupled with swelling global demand as the primary driver of coffee's bull market.
2011 will be the first year that Columbia should begin to see production yields from newly planted coffee trees. As such, production is expected to jump back over 10 million bags of coffee this year. This is still not back to historical averages , but on the road to recovery. While global coffee stocks as a whole will be down in 2011, this influx of higher quality beans could go a long way towards stemming coffee prices this year. @ commodity prices
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