Coffee prices rise but fall towards end of March
The International Coffee Organisation reported that coffee prices inched up in March, confirming an upward trend over the last five months. This is the highest monthly average since coffee year 2017-18. However, this upward trend reversed, and prices weakened in the final days of the month, recording their lowest levels in the last two days of the month. World consumption for coffee year 2020-21 is projected to an increase slightly over coffee year 2019-20.
The monthly average of the ICO composite indicator rose by 0.8% to 120.36 US cents/lb in March 2021, representing the fifth consecutive month of increase and the highest monthly average since September 2017. In March 2021, the daily composite indicator fluctuated between 115.42 and 125.30 US cents/lb. Uncertainty of regular supply to the market due to various restriction due to the ongoing pandemic and climactic events seems to support coffee prices while increasing the volatility of the uptrend.
Prices for all group indicators observed an upward trend in March 2021. Prices for Brazilian Naturals experienced the largest increase of 1.7% at 122.16 US cents/lb, which is the highest monthly average since January 2018. The average price for Robusta coffee rose by 0.7% to 73.86 US cents/lb, the highest monthly average of the last 21 months since the mark of 73.93 US cents/lb recorded in July 2019. Average prices for Colombian Milds rose by 0.3% to 177.49 US cents/lb and the average price for Other Milds grew by 0.4% to 167.05 US cents/lb. As a result, the differential between Colombian Milds and Other Milds fell slightly by 0.9% to 10.44 US cents/lb. The differential between Colombian Milds and Brazilian Naturals fell by 2.8% and the differential between Other Milds and Brazilian Naturals decreased by 3.2%. The average arbitrage in March, as measured on the New York and London futures markets, increased by 1.8% to 67.82 US cents/lb.
In March 2021, certified stocks of Arabica for New York Futures exchange were 1.97 million bags and certified stocks of Robusta coffee for the London Futures Exchange were 2.50 million bags, representing an increase by 3% and 2% respectively The volatility of the ICO composite indicator price increased from 5.8% in February to 7.7% in March. The volatility for all indicators increased in March after decreasing over the last two months. The highest volatility in March was recorded by the Brazilian Naturals at 9.7%, followed by Robusta coffee at 8.2%. The volatility of the futures markets also increased by 9.3% and 9.1% respectively for New York and London.
In coffee year 2020-21, global production is estimated to rise by 1.9% to 171.89 million bags with Arabica production growing by 5.2% to 101.88 million bags. The production of Robusta coffee is expected to decrease by 2.6% to 70.02 million bags. At regional level, a slight decrease of 0.8% is expected for Africa at 18.5 million bags in coffee year 2020-21 in comparison with 18.7 million bags in the previous coffee year. Production for Asia & Oceania is forecast to fall by 0.4% from 49.5 million bags in 2019-20 to 49.3 million in 2020-21. Production for Mexico and Central America is expected to remain at the level of 19.5 million bags recorded in coffee year 2019-20. An increase of 4.4%% in production is expected from South America at 84.53 million bags compared with 80.97 million bags in 2019-20.
Global exports in February 2021 totalled 10.47 million bags, compared with 11.16 million bags in February 2020. Exports in the first five months of coffee year 2020-21 increased by 2.5% to 52.81 million bags compared to 51.53 million bags during the same period in 2019-20. More specifically, the four groups of coffee experienced mix performance in green coffee exports over the first five months of coffee year 2020-21. Green exports of the Brazilian Naturals increased by 18.2%. Colombian Milds recorded an increase of only 0.3%. Green exports of Other Milds decreased by 12.3% and Green Robusta exports decreased by 5.6%.
Exports of all forms of coffee from Africa in the first five months of coffee year 2020-21 decreased by 12.2% to 4.9 million bags as shipments from Ethiopia, Côte d’Ivoire and Kenya declined by 31.6%, 54.1% and 10.8% respectively. Uganda, the largest regional exporter has recorded an increase of 9.6% to 2.3 million bags.
Asia and Oceania’s coffee exports declined by 9.4% to 15.4 million bags in October 2020 to February 2021. Vietnam’s exports during this period declined by 16.4% to 9.8 million bags while Indonesia’s shipments increased by 20.5% to 3.1 million bags. Exports from India, the region’s third largest producer, decreased by 4.6% to 1.9 million bags.
Compared to the first five months of coffee year 2019-20, exports from Mexico and Central America fell by 17.4% to 4.2 million bags as parts of the region have not yet recovered from the severe impact of hurricanes Iota and Eta. Notably, shipments from Honduras, the region’s largest producer, decreased by 30.7% to 1.4 million bags while those from Nicaragua fell by 14.5% to 750,000 bags. Guatemala’s exports declined by 14.4% to 761,352 bags. In contrast, Mexico’s exports between October 2020 and February 2021 increased by 20.8% to 1 million bags, partially in response to the greater availability of coffee compared to other countries in the region.
From October 2020 to February 2021, South America’s exports increased by 16.6% to 28.4 million bags. During this period, exports of all forms of coffee from Brazil rose by 24.2% to 20.5 million bags. Brazil is nearing the end of its 2020-21 crop year, which was an on-year for its Arabica production. Brazil’s exports of green Arabica increased by 26.7% to 17.1 million bags, and its green Robusta shipments grew by 28.8% to 1.7 million bags. Exports from Colombia increased by 1.1% to 6 million bags. Its shipments of green Arabica coffee slightly increased by 0.9% to 5.5 million bags.
World coffee consumption is projected to increase by 1.3% to 166.6 million bags in 2020-21 compared to coffee year 2019-20 as at-home consumption is increasing, offsetting the reduction of out-of-home consumption caused by social distancing measures while global economy recovers at a slow pace. Consumption in importing countries and domestic consumption in exporting countries is expected to be 115.96 million bags and 50.66 million bags, respectively. Consumption in Africa is expected to increase by 1.8% at 12.2 million bags. Consumption in Asia & Oceania will increase by 1.4% at 36.5 million bags. However, coffee year 2020-21 is projected to end with a surplus of 5.3 million bags as total production outpaces demand by 3.1%.
For the full report, visit: www.ico.org.
