Monthly coffee price continues to drop despite upturn at end of May

Accoridng to the International Coffee Organization (ICO) May 2019 market report, the monthly average of the ICO composite indicator fell to 93.33 US cents per pound in May 2019, 1.2 per cent lower than in April 2019. However, prices saw a sharp reversal in the downward trend as the daily composite indicator rose above 100 US cents per pound for the first time since 18 February 2019 on 30 and 31 May, at 101.17 and 103.25 US cents per pound, respectively. The ICO says market fundamentals, including reports of adverse weather negatively affecting Brazil’s new crop, and a strengthening of the Brazilian real in the second half of May, were the main drivers of the daily composite price. Average prices for all group indicators fell in May 2019, except for Colombian Milds, which remained stable at 124.40 US cents per pound. Robusta prices experienced the largest decline, averaging 71.12 US cents per pound, 2.9 per cent lower than in April 2019. Brazilian Naturals fell by 0.6 per cent to 91.95 US cents per pound, while Other Milds fell by 0.5 per cent to 120.55 US cents per pound. The decrease in Other Milds widened the differential between Colombian Milds and Other Milds in May 2019 to 3.85 US cents per pound, 17 per cent higher than in April 2019. In May, the arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets rose by 7.1 per cent to 32.41 US cents per pound, though it still remains below the five-year average of 54.76 US cents per pound. Read more:
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• World Coffee Producers Forum declares need for action on coffee price In April 2019, world coffee exports rose to 10.73 million bags, 4.6 per cent higher than the same month in 2018. Meanwhile, exports in the first seven months of coffee year 2018/19 reached 74.01 million bags, compared to 70.89 million bags in 2017/18. While demand has grown at an average annual rate of 2.2 per cent in the last five years, global output is expected to exceed it by 3.41 million bags in coffee year 2018/19, making this the second consecutive year of surplus. Global Coffee Report has launched a LinkedIn Showcase page. Follow HERE for up-to-date news and analysis of the global coffee industry.