Soft commodities to remain weak

09 April 1999

Soft commodities to remain weak

THE Economist Intelligence Unit (EIU) reports that the low prices of oilseeds, coffee and cocoa will help keep soft commodity markets weak this year.

The EIU says in its latest Food, Feedstuffs and the Beverages report that import demand remains poor.

Larger harvests and the devaluation of the Brazilian real are encouraging exports and forcing prices downwards, the report says.

Edible oils are predicted to be in surplus by about 670,000 tonnes in the current 1998/1999 season.

This will mean the average spot price for soybean oil in the first quarter of 1999 will be 22% lower than in the same quarter of 1998.

The coffee market is suffering from stagnant demand, with a small increase in US consumption being offset by falls in Asia and Russia.

As a result, coffee prices are expected to fall, especially in the arabica sector. The EIU says that demand for cocoa is also likely to remain flat this season.

Cocoa demand has been hit by falls in chocolate consumption in the former Soviet Union and Asia.

• Financial Times 09/04/99 page 30