Coffee Producers Cut Export Quota in Bid to Stabilize Prices

The International Coffee Organization has moved to tighten supplies in an effort to stabilize prices.

The 74-nation body of producer and consumer countries--empowered under treaty to regulate supplies and prices of coffee beans--announced Tuesday that the export quota for the present quarter had been cut by 1 million bags.

The reduction brings the total global quota for the current 1987-88 coffee year down to 55.5 million bags. One bag equals 60 kilos, or 132 pounds. The coffee year runs from Oct. 1 to Sept. 30.

The ICO said that the reduction had been automatically triggered because its indicator price was below $1.20 a pound Monday, at $1.1491. The quota was initially set at 58 million bags last October, when ICO members agreed to the return of export controls after a break of 19 months.

At the same time they also fixed the mechanism for adjusting the quota during the course of the year, and set a target range of $1.20 to $1.40 per pound for defense in 1987-88.

Coffee prices have been falling in recent weeks, weighed down by more than adequate supplies and poor demand, and triggering one export cut already, traders said.

Production in the current season--thanks to the prospect of a near-record Brazilian harvest--is estimated to exceed 100 million bags for the first time ever. Demand is currently sluggish because importers are living off their stocks, analysts said.

These holdings were accumulated last year before the return of ICO quotas, when prices were much lower. In mid-1987, the average price dropped below 90 cents a pound to lows not seen in five years.

Tuesday’s reduction in the export quota will be distributed among ICO exporters in proportion to their share of the global allocation.