Andrea Thompson

Head of Research and Analysis

CoffeeNetwork, a product of

FCStone LLC

www.coffeenetwork.com

CoffeeNetwork is a product of FCStone, LLC. Andrea Thompson is an

independent consultant to FCStone, LLC for the CoffeeNetwork service,

and is not an employee of INTL FCStone, Inc. or its subsidiaries. These

materials represent the opinions and viewpoints of the author, and do not

necessarily reflect the viewpoints and trading strategies employed by

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Eurosport – Wed, Nov 6, 2013 10:51 GMT

Tour de France - The real reason

Cavendish left Team Sky

Mark Cavendish has revealed that an incident with

a coffee machine was the tipping point that led him

to leave Team Sky.

World Coffee Market 2013/14

Changing Dynamics

• Biennial cycle no longer

• Return to over production

• Focus on demand make-up

Global Picture

World Balance - CoffeeNetwork Estimates

(million 60kg bags – national crop years)

-15

15

45

75

105

135

2000200

1200

2200

3200

4200

5200

6200

7200

8200

9201

0201

1201

2201

3

Production Consumption Balance

Global Picture

Robusta Trend Profile

CoffeeNetwork Estimates (million 60kg bags – national crop years)

-10

0

10

20

30

40

50

60

2000

2002

2004

2006

2008

2010

2012

Crop year beginning

Mln

bag

s

Production Consumption Balance

Global Picture

Arabica Trend Profile

CoffeeNetwork Estimates (million 60kg bags – national crop years)

-10

0

10

20

30

40

50

60

70

80

2000

2002

2004

2006

2008

2010

2012

Crop year beginning

Mln

bag

s

Production Consumption Balance

CoffeeNetwork Estimates (million 60kg bags)

30

40

50

60

70

80

90

2000

2002

2004

2006

2008

2010

2012

Crop year beginning

Mln

ba

gs

Arabica Production Arabica Consumption

Robusta Production Robusta Consumption

0

50

100

150

200

250

300

2005

2006

2007

2008

2009

2010

2011

2012

Mar

-13

Jun-1

3

Sep-1

3

Colombian Milds Other Milds

Brazilian Naturals Robustas

ICO Weighted Average Price Trends 2005 – 2013 (cents/lb)

Arbitrage:

Arabica v. Robusta

-85%

Historic High = $2.00

Arb reached $0.30

WORLD CONSUMPTION

CoffeeNetwork Estimates (million 60kg bags – national crop years)

20

40

60

80

100

120

140

160

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Crop year beginning

Mln

ba

gs

Exporters Importers Total

Dynamics of Demand

Consumers as demanding

for at-home as out-of-home

Explosion in single-serve

Continued emerging markets

demand growth

WORLD CONSUMPTION

Single Serve Cups – Market Share

60%18%

16%

6%

GreenMountain

Starbucks

Schmuckers

Others

Source: "Single Cup Brew Beverage Products in the U.S." Packaged

Facts. 11 Jul. 2013

US Projected Capsule Consumption

Source: "Single Cup Brew Beverage Products in the U.S."

Packaged Facts. 11 Jul. 2013

5.0

Billions of

Capsules

2011 2012 2016

1.0

Dynamics of Demand

•Emerging markets – new middle

classes/new consumers, soluble coffee,

single serve coffee, coffee shops.

•Traditional markets – increasing at-

home consumption, single serve coffee

Dynamics of Demand

2000 2010 2011 2012

Forecast

2020

TOTAL 105.97 137.02 139.05 142.00 174.50

Traditional 63.59 71.00 70.71 71.40 79.10

Producing 26.39 40.91 42.40 43.47 64.40

Emerging 15.99 25.11 25.94 27.13 31.00

Source: ICO – million bags

Dynamics of Demand

• Producing markets – continued

growth given focus on securing a solid

domestic market

• Ethiopia the longtime example, Brazil

and India now the leading examples

Producers’ Coffee Consumption

(CoffeeNetwork Estimates - million 60kg bags – national crop years)

0

5

10

15

20

25

30

35

40

45

2000/01 2006/07 2012/13

Brazil India Total

Dynamics of Demand

• Producing countries can limit the

impact of global price declines if they

have a healthy internal market

• Production costs / strategies in focus

again given the price erosion

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