Carmo de Minas. I attended a lecture today at Cocarive by Luiz Gonzaga de Castro, an economics professor from Lavras. The subject was minimizing risk, though Castro also addressed the issue of the ever-falling dollar. The lecture was quite good, with the charismatic Castro explaining the financial markets associated with coffee, the effects of currency fluctuations, and instruments and techniques for minimizing risk.
The room was full for the lecture on Risk Management.
Here Castro works backward to “translate” the market price. NYBOT (New York Board of Trade) prices are CIF, meaning they are the price of the coffee delivered to New York. Most prices we deal with are FOB Santos, which is the price of the product delivered to Santos. This price needs to be translated to reais, and then transport cost of delivering the product to Santos need to be factored in to arrive at “true price” to producer.
The USDA report came out a week ago and it showed that coffee consumption is way up and that coffee stocks are low. Castro put up this graph to demonstrate that this does not necessarily mean higher prices. The blue bars are coffee price and the red line is stock/consumption