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Katrina disrupting mundane things, too, like coffee

WASHINGTON—When Hurricane Katrina ripped through the New Orleans area, it tore through one of the biggest waterfront warehousing areas in the United States, disrupting the delivery and importation of an American staple—coffee.

The New York Board of Trade, which along with London is one of two places where coffee is traded globally, on Tuesday declared that a force majeure situation exists at the port. That's a situation in which an act of nature voids the terms of contract. The declaration means that delivery notices for coffee traded on the exchange before Tuesday are suspended until further notice.

The order also means that all coffee traded on the exchange will, for the moment, be delivered to Houston, Miami or New York.

New Orleans is synonymous with coffee. Tens of thousands of tourists visiting the Big Easy snap up cans of Cafe du Monde and other makers of the chicory coffee. It was the nation's top coffee port until 2003, when it lost that title to New York.

Coffee industry officials continue to watch events unfold on the Gulf Coast. The coffee industry fears potential flood damage to massive coffee supplies in storage. The Chicago Board of Trade said there were almost 733,000 bags of coffee, each weighing 132 or 150 pounds, in storage in New Orleans on Monday—the day Katrina came ashore.

"So far it looks as if there isn't a lot of damage to the warehouses," said Joe DeRupo, spokesman for the National Coffee Association in New York, which represents importers and roasters of coffee beans. "We still don't know whether water has gotten into the warehouses or not."

Because New Orleans accounts for about a sixth of the nation's coffee storage, any damage could affect U.S. coffee prices.

"If there is significant damage to coffee stocks, it could impact supply. If not, it will just delay shipments," DeRupo said.

Coffee roasters, who buy green coffee beans on the global market and roast them for grinding and consumption, said the Asian tsunami last year caused a spike in prices, but it dropped quickly.

"It dissipated rather quickly, and there is so much coffee in the world and so many places to ship it," said Lois Maffeo, a spokeswoman for Batdorf & Bronson Coffee Roasters in Olympia, Wash. "My spine isn't tingling yet."

Global coffee prices are in a slump because of excess production.

"I think a tiny increase in price over the last two days truly speaks volumes about how weak the price of coffee is," said James Cordier, head trader at Liberty Trading Group, a commodities trading company in Tampa, Fla.

Coffee is trading globally at about 94 cents for a 132-pound bag, after selling last year for as much as $1.40.


(c) 2005, Knight Ridder/Tribune Information Services.

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