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Andrea Thompson
Head of Research and Analysis
CoffeeNetwork, a product of
FCStone LLC
www.coffeenetwork.com
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CoffeeNetwork is a product of FCStone, LLC. Andrea Thompson is an
independent consultant to FCStone, LLC for the CoffeeNetwork service,
and is not an employee of INTL FCStone, Inc. or its subsidiaries. These
materials represent the opinions and viewpoints of the author, and do not
necessarily reflect the viewpoints and trading strategies employed by
FCStone, LLC. All forecasting statements made within this material
represent the opinions of the author, without exception.
This material should be construed as market commentary, merely
observing economic, political and/or market conditions, and not intended
to refer to any particular trading strategy, promotional element or quality of
service provided by FCStone, LLC.
FCStone, LLC is not responsible for any redistribution of this material by third
parties, or any trading decisions taken by persons not intended to view this
material. Information contained herein was obtained from sources believed to be
reliable, but is not guaranteed as to its accuracy. Contact FCStone designated
personnel for specific trading advice to meet your trading
preferences. Derivatives such as futures, options, and swaps involve substantial
risk of loss may not be suitable for all investors. You should fully understand
those risks prior to trading.
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Eurosport – Wed, Nov 6, 2013 10:51 GMT
Tour de France - The real reason
Cavendish left Team Sky
Mark Cavendish has revealed that an incident with
a coffee machine was the tipping point that led him
to leave Team Sky.
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World Coffee Market 2013/14
Changing Dynamics
• Biennial cycle no longer
• Return to over production
• Focus on demand make-up
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Global Picture
World Balance - CoffeeNetwork Estimates
(million 60kg bags – national crop years)
-15
15
45
75
105
135
2000200
1200
2200
3200
4200
5200
6200
7200
8200
9201
0201
1201
2201
3
Production Consumption Balance
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Global Picture
Robusta Trend Profile
CoffeeNetwork Estimates (million 60kg bags – national crop years)
-10
0
10
20
30
40
50
60
2000
2002
2004
2006
2008
2010
2012
Crop year beginning
Mln
bag
s
Production Consumption Balance
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Global Picture
Arabica Trend Profile
CoffeeNetwork Estimates (million 60kg bags – national crop years)
-10
0
10
20
30
40
50
60
70
80
2000
2002
2004
2006
2008
2010
2012
Crop year beginning
Mln
bag
s
Production Consumption Balance
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CoffeeNetwork Estimates (million 60kg bags)
30
40
50
60
70
80
90
2000
2002
2004
2006
2008
2010
2012
Crop year beginning
Mln
ba
gs
Arabica Production Arabica Consumption
Robusta Production Robusta Consumption
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0
50
100
150
200
250
300
2005
2006
2007
2008
2009
2010
2011
2012
Mar
-13
Jun-1
3
Sep-1
3
Colombian Milds Other Milds
Brazilian Naturals Robustas
ICO Weighted Average Price Trends 2005 – 2013 (cents/lb)
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Arbitrage:
Arabica v. Robusta
-85%
Historic High = $2.00
Arb reached $0.30
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WORLD CONSUMPTION
CoffeeNetwork Estimates (million 60kg bags – national crop years)
20
40
60
80
100
120
140
160
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Crop year beginning
Mln
ba
gs
Exporters Importers Total
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Dynamics of Demand
Consumers as demanding
for at-home as out-of-home
Explosion in single-serve
Continued emerging markets
demand growth
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WORLD CONSUMPTION
Single Serve Cups – Market Share
60%18%
16%
6%
GreenMountain
Starbucks
Schmuckers
Others
Source: "Single Cup Brew Beverage Products in the U.S." Packaged
Facts. 11 Jul. 2013
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US Projected Capsule Consumption
Source: "Single Cup Brew Beverage Products in the U.S."
Packaged Facts. 11 Jul. 2013
5.0
Billions of
Capsules
2011 2012 2016
1.0
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Dynamics of Demand
•Emerging markets – new middle
classes/new consumers, soluble coffee,
single serve coffee, coffee shops.
•Traditional markets – increasing at-
home consumption, single serve coffee
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Dynamics of Demand
2000 2010 2011 2012
Forecast
2020
TOTAL 105.97 137.02 139.05 142.00 174.50
Traditional 63.59 71.00 70.71 71.40 79.10
Producing 26.39 40.91 42.40 43.47 64.40
Emerging 15.99 25.11 25.94 27.13 31.00
Source: ICO – million bags
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Dynamics of Demand
• Producing markets – continued
growth given focus on securing a solid
domestic market
• Ethiopia the longtime example, Brazil
and India now the leading examples
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Producers’ Coffee Consumption
(CoffeeNetwork Estimates - million 60kg bags – national crop years)
0
5
10
15
20
25
30
35
40
45
2000/01 2006/07 2012/13
Brazil India Total
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Dynamics of Demand
• Producing countries can limit the
impact of global price declines if they
have a healthy internal market
• Production costs / strategies in focus
again given the price erosion
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THANK YOU
www.coffeenetwork.com