ICO Report October: Global coffee production to decrease in 2019/20

November Green Coffee Report

As we enter the next coffee year, world coffee production in coffee year 2019/20 is projected to drop by 0.9% at 167.4 million bags compared to 2018/19, with a 2.7% decline in Arabica output to 95.68 million bags, while Robusta production is expected to rise by 1.5% to 71.72 million bags.

Finishing the 2018/19 coffee year

The ICO composite indicator edged downward in October 2019 to 97.35 US cents/lb, decreasing 0.4% from September 2019. Prices for all group indicators fell in October 2019, except for Colombian Milds which rose by 0.1% to 132.09 US cents/lb. Other Milds fell by 1.5% to 126.99, Brazilian Naturals fell by 0.6% to 98.10 US cents/lb while Robustas decreased to 68.63 US cents/lb, 2.8% lower than in September 2019.

Global exports in September 2019 declined by 3.1% to 9.29 million bags. Robusta shipments fell by 12.9% to 3.02 million bags, and Colombian Milds decreased by 8.5% to 1.08 million bags. However, exports of Other Milds increased by 5% to 1.98 million bags while Brazilian Naturals grew by 5.2% to 3.21 million bags. Despite the fall in September shipments, total exports for coffee year 2018/19 reached a new record of 129.43 million bags, 8.1% higher than in 2017/18. Shipments of both Arabica and Robusta increased in 2018/19, by 12.3% to 85.01 million bags and 0.9% to 44.43 million bags, respectively.

World production in coffee year 2018/19 is estimated at 169 million bags, which is 5.4% more than in 2017/18. Production of Robusta increased 11% to 70.67 million bags, while Arabica production rose by 1.7% to 98.33 million bags, as declines from Honduras, Mexico and Peru offset the increase from Brazil. Not only did Brazil’s Arabica output increase, but its Robusta production also expanded for the second consecutive year following a downturn in 2016/17. This increase led the growth inSouth America’s production, which rose by 8.1% to 80.69 million bags in 2018/19. Output in Central America & Mexico declined by 1.7% to 21.35 million bags. However, production in Africa and Asia & Oceania increased by 5.3% to 18.30 million bags and 4.4% to 48.66 million bags, respectively.

Looking to 2019/20

World production in coffee year 2019/20 is projected to fall by 0.9% to 167.4 million bags. While Robusta output is projected to rise by 1.5% to 71.72 million bags, Arabica output is anticipated to decrease 2.7% to 95.68 million bags. The decline in Arabica production is largely due to Brazil as its 2019/20 crop is in the off-year of its biennial cycle. As a result of this downturn, production in South America could decrease by 3.2% to 78.08 million bags. Output from Colombia is estimated to increase by 1% to 14 million bags, slightly higher than the volume produced in the last two years.

Output from Asia & Oceania is estimated to rise by 1.9% to 49.58 million bags. Vietnam’s output is anticipated to remain stable at 31.2 million bags in 2019/20. Indonesia’s production declined by 13.2% in crop year 2018/19, but is projected to recover by 16.8% to 11 million bags in 2019/20. India may experience another fall in production in 2019/20 due to unfavourable weather, reaching 5.31 million bags, which is 0.3% lower than in 2018/19 and the third consecutive year of decrease.

Central America & Mexico’s harvest is projected to grow by 0.9% to 21.54 million bags. Production from Honduras is projected to decrease by 0.4% to 7.3 million bags while Mexico’s output could increase by 1.1% to 4.4 million bags. After a decline of 134,000 bags in 2018/19 due to unfavourable weather, production from Costa Rica is projected to rise by 8.6% to 1.55 million bags.

Africa’s output is projected to decline by 0.6% to 18.2 million bags. Increases in production from Ethiopia of 1.2% to 7.55 million bags and from Uganda of 1% to 4.75 million bags will likely be offset by declines from other African producers. Côte d’Ivoire’s output is projected to decrease by 4.1% to 2 million bags, following an increase of 41.6% to 2.09 million bags in 2018/19. Tanzania could see a decrease of 17.9% to 924,000 bags in 2019/20 as its Arabica crop enters an off-year.

Compared to an average annual rate of 2.1% in the previous 10 years, growth in global consumption in 2018/19 and 2019/20 is estimated to be slower. World consumption in 2018/19 grew 1.7% to 165.35 million bags, and in 2019/20, it is expected to rise by 1.5% to 167.9 million bags. Global coffee demand is expected to be affected by a slowdown in global economic growth, particularly for emerging markets and developing economies, as described by the International Monetary Fund in its October 2019 World Economic Outlook.

In 2019/20, coffee demand in Asia & Oceania is projected to grow by 3% to 37.84 million bags, and in North America by 1.7% to 30.97 million bags. Africa’s demand for coffee is estimated to grow by 1.8% to 11.94 million bags, and Central America & Mexico’s demand by 1.4% to 5.47 million bags and Europe’s by 1.2% to 54.54 million bags. However, consumption in South America is likely to remain stable at 27.14 million bags in 2019/20.

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