ICO reports composite indicator lowest since 2006

In March 2019, the ICO composite indicator fell by 3.1% to 97.50 US cents/lb, which is the lowest monthly average since October 2006 when the price was 95.53 US cents/lb.

Prices for all group indicators fell in March 2019, with Brazilian Naturals registering a decrease of 4.2% to 95.81 US cents/lb, the largest among the four group indicators and the lowest price for this group since July 2006. In other group indicators, Colombian Milds declined by 2.1% to 125.23 US cents/lb while Other Milds fell by 3.6% to 123.89 US cents/lb. Prices for Robusta fell by 2.1% to 76.96 US cents/lb. The monthly average of the ICO composite indicator fell by 3.1% to 97.50 US cents/lb in March 2019, the lowest monthly average since October 2006 when the price was 95.53 US cents/lb.

Shipments in the first five months of coffee year 2018/19 increased by 6.2% to 52.27 million bags, reflecting the ample supply of coffee on the international market. Shipments of Brazilian Naturals rose by 20.4% to 18.65 million bags, and Colombian Milds grew by 7.7% to 6.63 million bags.

World production in coffee year 2018/19 is estimated at 168.05 million bags while consumption is estimated at 164.99 million bags, creating a surplus of 3.06 million bags. This follows a surplus of 4.16 million bags in coffee year 2017/18.

Prospects of a large off-year crop from Brazil for crop year 2019/20 and increased exports in each month of 2018/19 compared to the previous year are contributing to the sustained low prices this coffee year.

In February 2019, world coffee exports amounted to 10.16 million bags, 3.2% higher than in February 2018. Increased shipments of Brazilian Naturals and Colombian Milds offset declines in Other Milds and Robusta. Compared to February 2018, exports of Brazilian Naturals grew by 27.7% to 3.46million bags, and exports of Colombian Milds rose by 12.4% to 1.39 million bags in February 2019. In contrast, shipments of Robusta fell by 4.9% to 3.21 million bags, and Other Milds decreased by 16.8% to 2.11 million bags.

In the first five months of 2018/19, total exports grew by 6.2% to 52.27 million bags. Exports of all types, except for Other Milds, increased compared to the first five months of 2017/18. Shipments of Brazilian Naturals rose by 20.4% to 18.65 million bags, and Colombian Milds grew by 7.7% to 6.63 million bags. Robusta exports in coffee year 2018/19 rose by 2.5% to 17.93 million bags. However, shipments of Other Milds fell by 10.1% to 9.05 million bags.

World production in coffee year 2018/19 is estimated at 168.05 million bags compared to 165.54million bags in 2017/18. The largest growth occurred in South America, where output increased by 4.4% to 80.42 million bags. Brazil’s 2018/19 crop year production has been revised upwards to 62.5 million bags since last month’s report. This in turn has caused global production to increase in both coffee year 2017/18 and 2018/19.

Brazil’s exports in the first five months of the coffee year are 29.7% higher than one year ago, reaching 18.32 million bags. Shipments from Brazil have been supported by the weakness of the Brazilian real against the US dollar in the past few months. Colombia’s production is estimated to rise by 2.7% to 14.2 million bags in coffee year 2018/19. In February 2019, it exported 1.26 million bags of coffee, and its shipments in October 2018 to February 2019, grew by 6.1% to 6.01 million bags. Africa is estimated to harvest 17.74 million bags in 2018/19, an increase of 1.4% over 2017/18. This is reflected in the growth of their shipments in the first five months of coffee year 2018/19, which more than doubled to 617,241 bags compared to last year when they reached 243,155 bags. Production in Central America & Mexico is estimated to decline by 0.5% to 21.72 million bags, while in Asia & Oceania output is estimated to decrease by 2% to 48.18 million bags.

World consumption in coffee year 2018/19 is estimated at 164.99 million bags compared to 161.38million bags in 2017/18. The largest growth occurred in Asia & Oceania where consumption increased by 4.4% to 36.9 million bags. Demand in Africa is estimated to rise by 2.5% to 11.17 million bags, and in North America by 2.2% to 30.61 million bags. Europe’s consumption is estimated to increase by 1.5% to 53.82 million bags, and South America’s consumption is estimated 1% higher at 27.24 million bags. However, demand in Central America & Mexico is expected to slow, with an increase of 0.2% to 5.27 million bags.

In coffee year 2018/19, production is estimated to surpass consumption by 3.06 million bags, which is the second year of surplus. In 2017/18, there was a surplus of 4.16 million bags, following a deficit of 366,000 bags in coffee year 2016/17. This overhang of supply has greatly contributed to current low prices.

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