Flooding from Hurricane Katrina has placed approximately 8 per cent of the world’s coffee supply - which is stored in warehouses in New Orleans - under threat.
In a statement issued by the American Association of Port Authorities (AAPA), Dr Néstor Osorio, executive director of the International Coffee Organisation (ICO), said he estimated that the loss of 96,000 tonnes of coffee stored in New Orleans would take a year to replace and would raise the price of coffee.
In the aftermath of Hurricane Katrina, the New York Board of Trade (NYBOT) has said that “no further delivery notices may be issued for coffee to be delivered in the Port of New Orleans until the condition of the warehouses and the coffee located there can be determined”.
The port stores green coffee from Central and South America bound for US roasters. About 1.6 million bags are stored in and around New Orleans, according to Judy Ganes of J Ganes Consulting in New York, which is about 27 per cent of green coffee stored in the US.
According to CNN Money news report, coffee futures advanced about 4 per cent on Thursday, extending this week's gains on continued concerns about hurricane damage to coffee storage and roasting facilities in New Orleans.
CNN Money said NYBOT’s washed Arabica contract for December delivery rose 3.90 cents to settle at US$1.0495 cents a pound, after trading between US$1.0110 and a three-week high of $1.0550. March Arabica climbed 3.70 cents to reach US$1.0805 cents a pound, while more distant deliveries rose 3.30 to settle at 3.65 cents.
"Today we had index funds buying more," Rodrigo Costa, vice president of institutional sales at Fimat USA, told CNN Money, attributing the growing fund interest to uncertainty about some 1.6 million bags of green coffee stored in New Orleans. “You will have a big draw down of US stocks if the coffee was damaged by the hurricane,” said Costa.
“Today we have no extent of the damage. It's still being evaluated,” said New York Board of Trade Chairman Frank Schoenhut. “As far as being able to characterise the loss of coffee or the impact to the market is difficult,” he explained, noting that the extent of the damage - which will probably determine future price movement - will not be known for some time.
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