Global coffee prices to shrink as production increases

WORLD – International Coffee Organisation (ICO) reports that coffee prices are expected to further move southwards as the world production is expected to increase.

According to the report by ICO, international market is expected to receive a total of 167.47 million bags of coffee in the 2018/19 financial year creating a surplus of 2.29 million bags compared to 165.18 million bags world consumption.

“Given the stronger growth in demand, the surplus for 2018/19 is projected to be 2.29 million bags, around 1 million bags less than in 2017/18.

This excess in supply continues to put downward pressure on prices that will likely continue over the next few months,” the report from ICO read.

The monthly average of ICO composite indicator fell by 8.2 per cent to 100.61 cents of a dollar in December 2018 while the daily composite indicator has been unstable ranging between high of 104.59 cents of a dollar to a low of 97.59 cents.

“The daily composite indicator hovered around 100 cents of a dollar with a range of around 4 cents of a dollar.

Coffee year 2018/19 is expected to be in surplus, though smaller than the one in 2017/18, which continues to put pressure on prices,” the report noted.
Prices for all group indicators fell sharply in December last year compared to the previous month.

The largest decreases occurred in the average price for Brazilian Naturals and Colombian Milds, which fell by 9.9 per cent to 102.10 cents of a dollar and by 8.2 per cent to 127.86 cents of a dollar, respectively.

Other Milds decreased by 7.3 per cent to 127.1 cents of a dollar, while Robusta fell by 7.1 percent to 77.57 cents.

In November 2018, Global coffee exports reached 9.88 million bags compared to 9.35 million in November 2017, indicating a 5.7 percent increase.

Exports of all groups, except for Colombian Milds, increased in November 2018 compared to the same month last year.

ICO is an intergovernmental organization for coffee, bringing together exporting and importing Governments with a vision of curbing the challenges facing the world coffee sector through international cooperation.

Its Member Governments represent 98% of world coffee production and 67% of world consumption.

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