Finland's largest coffee roaster Paulig said on Thursday it expected coffee prices to stay high even with good crops from world's two key producers, Brazil and Vietnam. Brazil, the world's number one producer, has suffered from a long dry period which may impact the next crop and extensive rains could impact the harvest in number two Vietnam.
"If it goes well in Brazil and Vietnam, the market balance would be still good and the price will stay at a high level," Paulig's purchasing manager Jouko Pihkanen told Reuters in an interview. Pihkanen said prices could slip a little from the highs seen this week, but a larger fall was very unlikely.
London November robusta coffee futures peaked at $2,026 a tonne on Monday, the highest for a second position for nine years, largely on fears over supplies. Pihkanen said the market was set to remain nervous over the next couple of weeks as the dryness continued in Brazil.
"If we don't get rain by the start of October the situation will be pretty bad," he said. Pihkanen said demand and supply were well balanced at the moment and hoped high prices would start to attract more farmers to invest in coffee production. He said current biofuel boom was also pushing farmers in coffee producing countries to switch investment into biofuel sources such as sugar cane. "Farmers have made money on coffee, but it has not been a gold mine," he said.