STOCK MARKET WATCH, Thursday, December 15, 2011

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21. Coffee Market Braces for Espresso-Bean Jolt {cheaper espresso drinks? }

http://www.bloomberg.com/news/2011-12-14/global-coffee-market-prepares-for-record-espresso-bean-jolt-commodities.html

Record robusta harvests in Vietnam and Brazil and potentially the biggest jump in Indonesian output in 16 years are boosting supplies of the coffee used in instant drinks and espressos as slowing economic growth threatens demand.

Production may climb for a fourth year, gaining 2.3 percent to 55.98 million bags (3.36 million metric tons) in 2011-2012, Rabobank International predicts. More supply will create the biggest glut in at least four years, according to Macquarie Group Ltd. Prices that already fell 9 percent this year will drop a further 8.3 percent to $1,750 a ton by June 30, the lowest level since October 2010, the median estimate in a Bloomberg survey of 13 traders showed.

Robusta surged 62 percent in London trading in 2010 as record demand created the first shortages in at least three years, according to Macquarie. Supply is now expanding amid mounting concern that Europe’s debt crisis will derail the global economy. Coffee sales fell for the first time in seven years in 2009 as nations contended with recessions, according to Euromonitor International Ltd., a London-based research group.

“We have record world production and I’m not optimistic on demand,” said Judith Ganes-Chase, a former Merrill Lynch & Co. analyst who is now the president of Katonah, New York-based J. Ganes Consulting LLC. “We’ll probably need to say goodbye to the bull market for a while.”