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Coffee prices continue to rise for eighth month as ICO predicts production will barely meet demand

International Coffee Organization

In June 2021, the International Coffee Organization (ICO) composite indicator of coffee prices rose by 4.6 per cent to 141.03 US cents per pound from 134.78 US cents per pound in May 2021.

This is the eighth continuous month that coffee prices have continued to rise and the highest monthly average recorded since 145.82 US cents per pound in November 2016. Compared against June 2020, coffee prices have risen 42.4 per cent.

Prices for all group indicators have increased in June 2021 with all four beating previous records for highest monthly averages.

Exports for all forms of coffee have decreased by 10.1 per cent to 9.78 million bags as of May 2021, as compared against 10.9 million bags in May 2020. Green coffee exports have declined by 12.3 per cent between May 2021 and May 2020. This was seen significantly in the Colombian Milds variety.

ICO states that the availability of shipping containers has been a major issue impacting trade flows.

Cumulative exports from June 2020 to May 2021 are estimated at 129.2 million bags, which is considered “relatively stable” as compared against the 129.4 million bags that were recorded from June 2019 to May 2020.

Total coffee production for the 2020/21 year is estimated to rise by 0.3 per cent to 169.5 million bags. Arabica production is predicted to increase the most, with a growth of 2.2 per cent pushing production to 99.1 million.

World coffee consumption is predicted to increase by 1.9 per cent to 167.2 million bags in 2020/21, as compared to 164.1 million bags for coffee year 2019/20. World coffee consumption, however, still remains 0.8 per cent below the level of 168.5 million bags that it was pre-COVID-19.

ICO predicts with easing pandemic restrictions and growing economic recovery, world coffee consumption will continue to grow.

Consumption in importing countries is expected to grow by 2.3 per cent to 116.7 million bags while domestic consumption in coffee exporting countries is predicted to grow by 1 per cent to 50.5 million bags.

The supply/demand ratio for the 2020/21 coffee year is expected to reverse as world production barely rises to meet world demand. ICO forecasts that supply will be 1.4 per cent higher than demand in the 2020/21 coffee year, as compared against 2019/20. This is due to reduced outputs from many coffee exporting countries

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