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Coffee prices surged higher in May 2021

The average global coffee prices rose by 10.4% in May 2021 to 134.78 US cents/lb, the highest monthly average since the level of 137.68 US Cents/lb registered in February 2017, reports the International Coffee Organisation (ICO).

“A firm upward trend of coffee prices over the first eight months of coffee year 2020/21 seems to confirm a net recovery from the low price levels that began in coffee year 2017/18,” says ICO.

It adds: “The price performance has been driven by an expected reduction in production in key exporting countries like Brazil for the 2021/22 season. Moreover, the brighter prospects for demand as the covid-19 pandemic-related lockdown measures are being removed in major consuming markets with the covid-19 vaccine programmes is generating greater confidence of consumers in an economic recovery and return to normal.”

According to ICO coffee report for the month of May, prices of all four groups of coffee have recorded a substantial increase, particularly the groups of Arabica coffee. “In terms of market fundamentals, 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 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.

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. 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

Total production in coffee year 2020/21 is estimated to rise by 0.4% to 169.60 million bags, with Arabica production increasing by 2.3% to 99.24 million bags. The production of Robusta coffee is expected to decrease by 2.1% to 70.36 million bags. At the regional level, African output is expected to remain unchanged at 18.68 million bags in coffee year 2020/21 in comparison with the previous coffee year. Production for Asia & Oceania is forecast to fall by 1.1% from 49.45 million bags in 2019/20 to 48.93 million in 2020/21.

Production for Mexico & Central America is expected to decrease by 2.1% at 19.19 million bags against 19.60 million bags in coffee year 2019/20. The decrease is likely to be significant as some countries in the region have been affected by hurricanes Eta and Iota earlier in this current coffee year as they are still struggling to recover from the damages caused to production and marketing infrastructure.

An increase of 2% in production is expected from South America at 82.8 million bags, compared with 81.2 million bags in 2019/20. However, Brazilian production for the next crop year 2021/22, which has already started, is expected to decrease significantly as it is the off-year production cycle of Arabica coffee and was substantially affected by below-average rainfall.

Exports

Exports in April 2021 totalled 11.40 million bags, representing a 1% increase compared with 11.29 million bags in April 2020. Exports in the first seven months of coffee year 2020/21 reached 77.52 million bags, an increase of 4.1% compared to 74.49 million bags during the same period in coffee year 2019/20. Cumulative exports of Colombian Milds and Brazilian Naturals over the first seven months of coffee year 2020/21 increased by 8.8% to 9.07 million bags and 18.3% to 27.68 million bags, respectively. Cumulative exports of Other Milds decreased by 6.4% to 13.14 million bags from 14.03 million bags in 2019/20. Shipments of Robusta over the same period of coffee year 2020/21 fell by 3.8% to 27.64 million bags.

The increase in exports was primarily driven by relatively high price levels and the ease of movement restrictions due to the covid-19 pandemic. However, concerns about the availability of containers for shipments remain a major concern to trade. Exports of green coffee increased by 4.8% to 70.42 million bags in the first seven months of coffee years 2020/21 compared to 67.2 million bags of the same period in the previous coffee year.

Exports of roasted coffee fell by an estimated 6.3% to 403,767 bags, while those of soluble coffee fell by 2.4% to 6.68 million bags from 6.86 million bags over the seven months of coffee year 2019/20. In regional terms, exports of all forms of coffee from Africa in the first seven months of coffee year 2020/21 decreased by 4.1% to 7.37 million bags, as shipments from Ethiopia, Côte d’Ivoire and Madagascar declined by 25.6%, 46.3% and 55.7% respectively. Uganda, the largest regional exporter, has recorded an increase of 16.2% to 3.4 million bags.

World coffee consumption

World coffee consumption is projected to increase by 1.9% to 167.58 million bags in 2020/21 compared to 164.43 million bags for coffee year 2019/20. With the easing of covid-19 pandemic related restrictions and the subsequent prospects of economic recovery, consumers are regaining confidence leading to a positive trend of world coffee consumption.

Consumption in importing countries and domestic consumption in exporting countries is expected to grow by 2.3% and 1.0%, respectively. Consumption in Africa is expected to increase by 2.1% at 12.27 million bags. Consumption in Asia & Oceania is forecast to increase by 1.3% at 36.70 million bags. In the region of Mexico and Central America, consumption is expected to increase by 0.7% at 5.36 million bags. Consumption in Europe and North America will increase by 1.8% and 3.7%, respectively. Consumption of South America is expected to increase by 1.2%. As a result, the surplus of total production over world consumption is expected to be reduced at 2.02 million bags, compared with 4.50 million bags in the previous coffee year.

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