LONDON, UK – The ICO composite indicator price averaged 117.26 US cents/lb in November 2017, down 2.3% from October 2017. However, nearly all of the decrease occurred in prices for Robusta, which decreased by 7.2% to an average of 91.33 US cents/lb in November 2017.
Exports in October 2017 were 11.4% lower than the same month last year on 8.8 million bags.
Shipments of Arabica were 9.9% lower at 5.7 million bags. As discussed later in this report, production in some countries in Central America & Mexico has partially recovered from the outbreak of leaf rust a few years ago.
In crop year 2016/17, Honduras and Nicaragua surpassed the volume of output achieved before the outbreak.
However, output from Guatemala and El Salvador has recovered from the low volumes in crop years 2012/13 and 2013/14, but remains below the average volume of production from before the outbreak.
The ICO composite indicator price continued to decline in November 2017, though nearly all of the decrease occurred in prices for Robusta.
The indicator price averaged 117.26 US cents/lb, down 2.3% from the average price in October. Compared to the average price in November since 2010, the average ICO composite indicator price in November 2017 was lower only in November 2015 (115.03 US cents/lb) and November 2013 (100.99 US cents/lb).
The Arabica group indicators were generally stable in November. The difference in the average price for all three Arabica groups in November 2017 compared to October amounted to less than half a percent.
However, the monthly average for the Robusta group decreased by 7.2% to an average of 91.33 US cents/lb.
The average arbitrage in November, as measured on the New York and London futures markets, increased by 13.8% to 48.50 US cents/lb.
Meanwhile intra-day volatility of the ICO composite indicator price decreased further by 0.4 percentage points to 5.4%.
Exports for the first month of the new coffee year were 11.4% lower than the same month last year on 8.8 million bags. Shipments of Arabica were 9.9% lower at 5.7 million bags.
Robustas declined to 3.10 million bags, 14% lower than last year, due largely to an estimated 30.3% decrease in exports from Vietnam.
Despite the downturn in global exports in October 2017, world exports during the previous twelve months (November 2016 to October 2017) increased by 2.4% compared to the same period one year ago.
Exports from most regions declined in October 2017 compared to one year ago. Asia & Oceania shipped 2.87 million bags in October 2017, 18.7% lower than last year while exports from South America decreased by 14% to 4.55 million bags.
This was a result of lower exports from Brazil (-18.3%) and Colombia (-8.7%). Reduced output from Brazil in crop year 2017/18, due to the biennial crop cycle, decreased the availability for export while heavy rains in Colombia have delayed harvesting of its 2017/18 crop.
Exports from Central America & Mexico were 3.2% lower compared with exports in October 2016.
This is largely accounted by a 67.1% decrease from Costa Rica and a 20.2% decrease from Honduras.
However, exports from Honduras in October 2017 remain well above the five-year average volume of October shipments.
In contrast, exports from Africa rose by 0.28% to 0.98 million bags in October 2017, led by increases in Uganda (82.5%) and Ethiopia (31.8%).
Exports may pick up later in the coffee year as world coffee production for crop year 2017/18 is preliminarily projected to increase by 0.8% to 158.69 million bags. Production in South America is projected to decrease by 3.1% due in part to the lower than expected output in Brazil during crop year 2017/18.
Africa’s output could increase by 4.1%, led by ongoing growth in Uganda where its replanting efforts in recent years are beginning to bear fruit.
Production in Asia & Oceania is also expected to grow by 4.4% as beneficial weather and adequate water supplies during the initial stages of growth are expected to boost yields in Vietnam, the largest regional producer and second largest globally.
Production in Central America & Mexico is expected to expand by 4.3%, following an increase of 16.3% in crop year 2016/17 as some of these countries have recovered from the outbreak of coffee leaf rust several years ago.
Before the outbreak of coffee leaf rust, production in Honduras grew at around 6.8% per annum, reaching 5.89 million bags in crop year 2011/12. However, its production fell by 22.2% over the next two crop years.
Efforts were undertaken to combat this disease such as replanting with rust-resistant coffee trees and the provision of technical training to farmers. Since 2014/15, its production has grown at around 12.2% a year, reaching a new record of 7.43 million bags in 2016/17. In 2017/18, it is estimated to be 8.35 million bags
Guatemala’s production was in decline between crop year 2000/01 and 2012/13 by an average of 2.1% per year. Between 2011/12 and 2013/14, its output fell by 17.2% to 3.19 million bags, which is the lowest level since 1988/89.
In response to the outbreak, Guatemalan farmers replanted and pruned their trees, employed better crop management, and expanded the use of fumigation. As a result of these efforts, production increased to 3.31 million bags in 2014/15 and has continued to grow in the last two crop years.
Production in both Costa Rica and El Salvador were on a downward trend since 2000/01, as annual production fell by 2.3% and 3.1%, respectively. The coffee leaf rust outbreak caused a further decline in output of 15.2% in Costa Rica and 56.5% in El Salvador from 2011/12 to 2013/14.
While El Salvador’s production has generally increased since the 0.51 million bags produced in 2013, output remains well-below the average volume achieved before the outbreak.
On the other hand, Costa Rica’s output has not grown since the outbreak, though the annual decline in the last three years has returned to the same level as before the outbreak. However, its production is preliminarily estimated to rise to 1.56 million bags in 2017/18.
Nicaragua’s production grew at an annual average rate of 2.8% per year between 2000/01 and 2011/12. After reaching 2.19 million bags in 2011/12, its output fell to 1.87 million bags in crop year 2012/13. However, unlike other countries in the region, its production rebounded to 2.06 million bags in 2013/14 though it fell to 1.90 million bags in the following crop year.
Since then its production has grown about 6.6% a year and is estimated at 2.3 million bags in 2016/17.
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