Coffee Market Update

There has been a steady upward trend in  coffee prices over the first eight months of the coffee year 2020/21 and this suggests a net recovery from the low price levels that began in coffee year 2017/18. The increase in prices has been driven by an expected reduction in production in key exporting countries like Brazil for the 2021/22 season as well as increases in demand.

Brazil Coffee Crop

Analysts Safras & Mercado have estimated that almost 40% of the new Brazil coffee crop has been harvested. The new crop is forecast to be 56.50 million bags, therefore, based on the analysts estimate, 23 million bags of the new crop have been harvested. This coffee crop is made up of around 15 million bags of conilon robusta coffee, and approximately 8 million bags of arabica coffee harvested so far. The Brazil harvest at this time last year was 41% harvested so based on the numbers, this year is running marginally slower at 40% 

Exports

Shipments by exporting countries to all destinations totalled 11.40 million 60-kg bags in April 2021, compared with 11.29 million bags in April 2020. As a result, total exports over the first 7 months of coffee year 2020/21 amounted to 77.52 million bags compared to 74.49 million bags over the same period in coffee year 2019/20. Cumulative exports from May 2020 to April 2021 are estimated at 130.40 million bags, a small decrease of 0.48% compared with the 130.97 million bags recorded from May 2019 to April 2020.

World Consumption & Production

World consumption for coffee year 2020/21 is projected at 167.58 million bags, an increase of 1.9% on its level of 164.43 million bags in coffee year 2019/20. Although world consumption is increasing, it remains 1.2% below world production. However, with prospects of lower production in Brazil for coffee year 2021/22 and the reductions in other countries, world consumption is likely to exceed world production in coffee year 2021/22. Total production for coffee year 2020/21 is estimated at 169.60 million bags, representing a 0.4% increase on 168.94 million bags in coffee year 2019/20. 

The ICO Indicator

In May 2021, the ICO composite indicator rose by 10.4% to 134.78 US cents/lb, the highest monthly average since the level of 137.68 US Cents/lb registered in February 2017. The ICO composite indicator price provides an overall benchmark for the price of green coffee of all major origins and type, and is considered to be the best available measure of levels of green coffee transactions on a global basis.

Demand Prospects

We will continue to see an increase in demand as covid-19 restrictions are lifted in major coffee consuming markets. In addition to this, the rapid progress of vaccine programmes in these countries is contributing to the increase in demand as people become more confident in the economic recovery and feel safer about getting back to some degree of normality.