GCR petitions industry leaders on the year ahead: the opportunities, challenges, and trends set to change the game and demand our attention in 2020.
José Sette
Executive Director, International Coffee Organization
In the first 10 months of 2019, the coffee market fluctuated in a tight range between 93 and 101 US cents per pound, as measured by the monthly average of the International Coffee Organization (ICO) composite indicator price.
However, in November 2019 the market broke out of this range and the ICO indicator reached its highest level of the year at 107.23 US cents per pound, amid expectations of a global deficit in coffee year 2019-20 preliminarily estimated at 502,000 bags. A significant slowdown in exports and adverse weather in parts of Central America and Asia have also helped to support the market.
Even though the market is at its highest levels since the last quarter of 2018, we must continue to bear in mind that growers are still unable to cover their production costs in many origins, calling into question the economic sustainability of the world coffee sector.
On the other hand, the recent weakness of the Brazilian Real as well as the upcoming on-year crop in Brazil may limit any gains as we move forward. Although we can be cautiously optimistic that the sustained fall in coffee prices since the end of 2016 is drawing to a close, this should not be a motive for commemoration. Much hard work remains to be done until we can consider the world coffee sector to be truly economically sustainable.