ICO June: Sustained growth in global prices

The monthly average of the ICO composite indicator rose by 7.1% to 99.97 US cents/lb in June 2019, which is the first increase in the monthly average since January 2019 when prices rose by 0.9% to 101.56 US cents/lb.

The daily composite indicator ranged between 95.17 US cents/lb on 18 June and 105.25 US cents/lb on 28 June. Average prices for all group indicators rose in June 2019. Brazilian Naturals experienced the largest increase, averaging 100.69 US cents/lb, 9.5% higher than in May 2019. Robusta prices grew by 4.1% to 74.02 US cents/lb. Colombian Milds increased by 7.3% to 133.49 US cents/lb while Other Milds rose by 7.6% to 129.73 US cents/lb. As a result of these price movements, the differential between Colombian Milds and Other Milds in June 2019 fell by 2.3% to 3.76 US cents/lb, compared to May 2019, which follows three months of increase.

In June, the arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets, rose by 20.4% to 39.03 US cents/lb.

Exports rise by almost 20%

In May 2019, world coffee exports rose by 19.4% to 11.6 million bags compared to May 2018. This growth was led by shipments of Brazilian Naturals, which rose by 65.4% to 3.5 million bags. However, the rise is only this large as in May 2018, shipments were well below expectations due to a nationwide trucking strike that delayed delivery of coffee to ports. Brazil’s May exports averaged 2.73 million bags from 2013 to 2017.

Robusta exports grew by 8.3% to 4.05 million bags in May 2019 compared to the same month one year ago. Exports of Colombian Milds grew by 6.1% to 1.15 million bags while Other Milds increased by 4.4% to 2.9 million bags. Global exports in the first eight months of coffee year 2018/19 reached 86.57 million bags, an increase of 7.5% compared to the same period one year ago.

Imports increase by 5%

Imports by ICO importing members and the US, which on average account for around 75% of global imports, increased by 4.9% to 66.56 million bags in the first half of coffee year 2018/19. Imports by the EU in October 2018 to March 2019 rose by 3.5% to 42.71 million bags, and those of the United States increased by 8.1% to 14.98 million bags. Imports by Japan grew by 13.5% to 3.92 million bags, and the Russian Federation by 4.9% to 2.77 million bags. In contrast, Switzerland’s imports declined by 7.4% to 1.53 million bags in the first six months of coffee year 2018/19. Imports by Norway and Tunisia increased by 1.3% to 364,958 bags and 12.9% to 282,259 bags, respectively.

Brazil was the largest source of coffee imports by the European Union, accounting for 20.9% of its imports in October 2018 to March 2019. This was followed by Vietnam (15%), Colombia (3.8%), Peru (3.6%) and Honduras (3%). Imports from Brazil and Colombia accounted for 52.4% of imports by the United States in the first six months of coffee year 2018/19. This was followed by Vietnam (10.2%), Mexico (5.7%) and Peru (5.1%).

Vietnam and Brazil were the two main origins imported by the Russian Federation in October 2018 to February 2019, accounting for 30.8% and 20.9%, respectively. India represented 7.5% of total imports, while Germany (9.6%) and Italy (6.1%) were also important origins. Nearly 50% of imports by the Russian Federation were of roasted (11.5%) or soluble (36.9%) coffee during this period. This is a much higher share of processed coffee than the other large importers where green coffee imports tend to account for around 90% of imports, except in the European Union where roasted coffee imports represented 20.1% of total imports.

Global coffee production is estimated at 167.75 million bags in coffee year 2018/19, compared to global consumption of 164.64 million bags. Although the increase in imports during the first six months of the coffee year indicates ongoing demand growth, it has not kept pace with the rise in global production in the last two years. As a results, there is a surplus of 3.11 million bags in coffee year 2018/19 following a surplus of 3.84 million bags in coffee year 2017/18.

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