ICO Coffee Report shows continued price decline

The July 2018 coffee report from the International Coffee Organization (ICO) shows another month of continuous low prices. The ICO composite indicator decreased by 2.9 per cent to an average of 107.20 US cents per pound in July. This represents the lowest monthly average for July since 2007. Coffee prices have fallen consistently over the course of coffee year 2017/18, with decreases recorded in seven out of the last 10 months. After a slight rise in May, prices for all group indicators fell for the second consecutive month in July 2018, though the largest month-on-month decrease occurred for Brazilian Naturals, which declined by four per cent to 110.54 US cents per pound. The largest decrease occurred in the average price for Brazilian Naturals, which fell by 4 per cent to 110.54 US cents per pound, followed by a decline of 3.3 per cent to 133.92 US cents per pound for Colombian Milds. Other Milds decreased by 2.6 per cent to 130.60 US cents per pound, which narrowed the differential between Colombian Milds and Other Milds by 26.5 per cent to 3.32 US cents per pound. The monthly average Robusta price fell by 1.9 per cent to 84.42 US cents per pound. The average arbitrage in June, as measured on the New York and London futures markets, fell by 10 per cent to 38.50 US cents per pound. However, intra-day volatility of the ICO composite indicator price increased by 0.3 percentage points to 4.8 per cent as intra-day volatility for all Arabica indicators increased while the volatility of Robusta fell by 1.4 percentage points to 4.1 per cent. Total exports in June 2018 amounted to 10.45 million bags, 2.6 per cent higher than in the same month one year ago. Robusta exports saw an increase of 7.9 per cent to 3.95 million bags, while Arabica shipments fell by 0.4 per cent to 6.51 million bags. Exports of Colombian Milds grew by 1.1 per cent to 1.03 million bags, and Brazilian Naturals grew by 2.2 per cent to 2.61 million bags. Shipments of Other Milds amounted to 2.87 million bags, 3.2 per cent lower than in June 2017. Total coffee exports for October 2017 through June 2018 were 0.3 per cent higher than those in the same period one year ago. This growth was led by increased shipments of Robusta, which reached 33.8 million bags, 3.6 per cent higher than one year ago. In contrast, Arabica shipments declined by 1.5 per cent to 57.06 million bags in the first nine months of coffee year 2017/18. Within this timeframe, exports of Colombian Milds and Brazilian Naturals decreased by 6.1 per cent to 10.48 million bags and 3.1 per cent to 25.67 million bags, respectively. However, shipments of Other Milds are 3.1 per cent higher at 20.91 million bags compared to one year ago. World production in 2017/18 is estimated at 158.56 million bags, 0.3 per cent lower than last year. Arabica output is estimated 6.6 per cent lower, at 97.16 million bags, while Robusta production is estimated at 61.4 million bags, 11.5 per cent higher than 2016/17. Production is estimated to have grown in all regions except South America, which is 8.2 per cent lower at 70.57 million bags.

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