In August 2021, coffee prices recorded the tenth consecutive month of increase, sparked by concerns over supply, due to climate adverse conditions in major producing countries and increasing freight costs coupled with covid-19 lockdown restrictions disrupting trade flows in Asia.
The monthly average of the International Coffee Organization (ICO) composite indicator increased by 5.2 per cent to 160.14 US cents per pound in August 2021 from 152.24 US cents in July 2021. The level reached in August 2021 represented an increase of 51.3 per cent since the start of the current coffee year.
The monthly average of the ICO composite indicator in August 2021 is the highest level since 162.17 cents per pound was recorded in November 2014.
The ICO says prices of Arabica coffee have recorded substantial increases while those of Robusta coffee registered a moderate upturn. Concerns over the size of the next Brazilian crop, exacerbated by the recent frost, have led to record high volatility of the spot and futures prices.
In terms of market fundamentals, exports of all forms of coffee by all exporting countries to all destinations totalled 10.7 million 60-kilogram bags in July 2021, an increase of 1.7 per cent compared with 10.5 million bags in July 2020.
The level of total exports in July 2021 is 4.4 per cent below the volume of 11.9 million bags recorded in July 2019, before the pandemic. Total exports of all forms of coffee over the first 10 months of coffee year 2020/21 (October 2020 – July 2021) amounted to 108.96 million bags, an increase of 2.2 per cent compared with 106.63 million bags during the same period in coffee year 2019/20.
Cumulative exports from August 2020 to July 2021 are estimated at 129.7 million bags, an increase of 1.6 per cent compared with the 127.6 million bags recorded from August 2019 to July 2020.
World consumption for coffee year 2020/21 is projected at 167.01 million bags, an increase of 1.9 per cent over the level of 163.9 million bags recorded in coffee year 2019/20 and 0.3 per cent lower than the 167.6 million bags observed in coffee year 2018/19 before the pandemic.
Domestic consumption in producing countries represented 30.2 per cent of the total volume of world consumption, with the remaining 69.8 per cent being consumed in non-producing countries.
The projection for total production in coffee year 2020/21 is 169.64 million bags, representing a marginal increase of 0.4 per cent on the 169 million bags harvested in coffee year 2019/20. However, the ICO says a substantial reduction of world production is expected in coffee year 2021/22 as some important origins have been affected by climate-related shocks.
For more information, visit www.ico.org