Coffee Outlook February 2003

1
Coffee OutlookFebruary 2003
2
Coffee Historical Background

• Coffee was 1st Discovered in Ethiopia in the 6th
  Century
• Coffee Drinking Begins to Spread in Europe in
  1600
• In 1727 Coffee Plant Was Smuggled into Brazil
• In Dec. 7 1881 Coffee Exchange Begun in NY
• 1906 First Withhold Scheme of Great Proportion

3
Brazilian Production

• 1929 Sao Paulo Coffee Institute Runs Out of
  Money and Prices Fall to 8 cents
• 1930 Brazil Begins to Burn Excess Stocks
• 1944 Burning Stops After 78 Million Bags Have
  Been Destroyed

4
International Agreements

• 1958 Latin American Coffee Agreement
• 1966 World Stocks Reach 87 Million and Brazil
  Has 65
• 1989 International Coffee Organization
• 1993 ACPC Withholds Coffee
• 1994 Drought in Minas Production Falls
• 1999Brazilian Currency Devaluation

5
Brazils Coffee Production
6
Vietnams Coffee Production
7
Brazil Effect

• Pressuring Prices to the Detriment of World
  Producers
• Central America in Social Crisis
• Africa 60/70 of Income from Rural Workers
• Increased Violence
• Reduction of Production in Other countries
  Increases Dependence Upon Brazil
• Result in Increase of Volume

8
Coffee Market

• World Coffee Production had a Increase of 125.1
  Million Bags in 2002/2003
• Increase of 12 Over the Previous Year
• Increase Due to Brazilian Production

9
World Stocks
10
Decline Export Revenue

• Export for Calendar 2002 Fell from 90.30 to 88.62
• First Drop in Four Years Brazil 20.46,
  Vietnam 15.41, Colombia 3.32 , Mexico/
  Central America 10.79, Asia/ Oceania 11.19
  
• Value for
• 2002 5.25 2001 5.43
• 2000 8.17 1997 12.88

11
Overview

• Brazils Influence is Increasing in the Coffee
  Market for Better or Worse
• Winter Season in Brazil Will Be More Volatile
• Once Brazil Builds Stocks Historically, It Will
  Be Hard to Let Go
• Heightened Volatility During Brazil Weather
  Season