LONDON, UK – The ICO composite indicator decreased by 4.1% to an average of 104.45 US cents/lb in May 2020, which is the second consecutive month of decrease, says the Ico in its latest market report. While all Arabica groups trended downward in May 2020, the Robusta group indicator rose by 0.9% to 64.53 US cents/lb.
The volatility of the ICO composite indicator decreased by 2.9 percentage points to 7.7% over the past month. In April 2020, world exports reached 10.82 million bags, 3.1% lower than the 11.17 million bags exported in April 2019.
Global shipments in the first seven months of coffee year 2019/20 fell by 3.8% to 72.78 million bags. Exports from Africa increased by 7% to 7.66 million and from Asia & Oceania rose by 0.6% to 23.62 million bags in October 2019 to April 2020. During the same period, shipments from Central America & Mexico declined by 4.9% to 8.77 million bags and from South America by 8.6% to 32.74 million bags.
In May 2020, the ICO composite indicator averaged 104.45 US cents/lb, 4.1% lower than in April and the second consecutive month of decrease. The daily price of the ICO composite indicator reached a high of 107.29 US cents/lb on 11 May, and then declined over the next two weeks reaching a low of 98.68 US cents/lb on 29 May. Expectations of a larger output from Brazil’s 2020/21 crop, the harvesting of which is underway, and the ongoing bearish expectations for demand put downward pressure on prices in May.
All Arabica group indicator prices presented a downward trend in May 2020. Colombian Milds fell by 4.3% to 154.96 US cents/lb, and Other Milds by 3% to 149.84 US cents/lb. As a result, the differential between Colombian Milds and Other Milds narrowed by 30.8% to 5.12 US cents/lb. Prices for Brazilian Naturals fell by 8.6% to 101.69 US cents/lb. In contrast, Robusta prices rose in May 2020, following five consecutive months of decline, and averaged 64.53 US cents/lb, 0.9% higher than the previous month.
The New York Arabica futures market fell by 6.9% to an average of 107.54 US cents/lb in May 2020 while the London Robusta futures market rose by 0.5% to 54.67 US cents/lb. As a result, the spread between Arabica and Robusta coffees, as measured on the New York and London futures markets, decreased to 52.87 US cents/lb, which is 13.5% lower than in April. Certified Arabica stocks decreased by 2.8% month-on-month to 2.05 million bags in May 2020, which is the fourth consecutive month of decline.
The volatility of the ICO composite indicator decreased by 2.9 percentage points to 7.7% over the past month, after two months of increased volatility as highlighted in the ICO Coffee Break No. 2. The volatility of all Arabica group indicators fell in May 2020. Other Milds decreased by 4.3 percentage points to 8.6%, Brazilian Naturals by 3.9 percentage points to 10.3% and Colombian Milds by 3.5 percentage points to 7.6%. However, the Robusta group indicator volatility was 6.8%, an increase of 2 percentage points from April 2020.
Global shipments in April 2020 totalled 10.82 million bags, 3.1% lower than the 11.17 million bags exported in April 2019. Exports in the first seven months of coffee year 2019/20 reached 72.78 million bags, down by 3.8% compared to 75.67 million bags for the same period in 2018/19. Shipments of Arabica fell by 7.7% to 45.27 million bags in October 2019 to April 2020 while Robusta shipments increased by 3.3% to 27.52 million bags
Exports from Africa increased by 7% to 7.66 million bags in the first seven months of coffee year 2019/20. Ethiopia’s shipments during this period increased by 19.2% to 2.04 million bags and its shipments in April 2020 rose by 20% to 374,000 bags due to a greater availability of coffee for export. Uganda’s exports grew by 19.6% to 2.93 million bags, reflecting greater output from newer trees coming into production. Its shipments in April 2020 rose by 17.5% to 360,000 bags. Shipments from Côte d’Ivoire declined by 3.8% to 953,000 bags in the first seven months of coffee year 2019/20. However, much of this decline occurred in April when exports fell by 52.4% to a provisionally estimated 60,000 bags due to the lower availability of shipping containers.
Shipments from Asia & Oceania rose by 0.6% to 23.62 million bags in October 2019 to April 2020. Viet Nam’s exports in the first seven months of coffee year 2019/20 are estimated at 16.4 million bags, 1.1% lower than in the same period one year ago, due to lower demand and low prices discouraging farmers from selling their harvest. Indonesia’s shipments in October 2019 to April 2020 rose by 43.5% to 3.63 million bags and its exports in April 2020 reached 509,000 bags, up by 0.8% compared to April 2019.
Exports from India in the first seven months of coffee year 2019/20 fell by 18% to 2.91 million bags and in April 2020, decreased by 41.3% to 351,000 bags. Strict measures against covid-19 in April contributed to the reduction in exports as well as lower prices and a smaller harvest.
In the first seven months of coffee year 2019/20, exports from Central America & Mexico declined by 4.9% to 8.77 million bags. In October 2019 to April 2020, shipments from Honduras fell by 6.7% to 3.5 million bags and its exports in April 2020 decreased by 19.8% to 748,000 bags. Guatemala’s shipments in the first seven months of the coffee year fell by 3.1% to 1.66 million bags while Nicaragua’s exports during this period rose by 16.7% to 1.56 million bags.
Exports from South America from October 2019 to April 2020 fell by 8.6% to 32.74 million bags. Brazil’s exports in the first seven months of coffee year 2019/20 decreased by 8.6% to 23.11 million bags. However, its exports in April 2020 rose by 2.5% to 3.35 million bags. Part of the growth in April is attributed to an increase of 12.3% in shipments of soluble coffee, which reached 357,000 bags.
Exports of green coffee grew by 1.5% to 2.99 million bags. A decline of 1.1% in green Arabica shipments to 2.68 million bags was offset by a rise of 30.3% to 313,000 bags for green Robusta. After strong growth in the first part of the coffee year, Colombia’s exports in October 2019 to April 2020 declined by 6.5% to 7.5 million bags and its shipments in April 2020 fell by 26.4% to 642,000 bags.
According to the National Federation of Coffee Growers of Colombia, production in April 2020 decreased by 27.8% to 744,000 bags, which is the lowest volume in April since crop year 2011/12. Peru’s shipments in the first seven months of the coffee year fell by 17.7% to 1.84 million bags, but its exports in April 2020, the start of its new crop year, rose by 13.5% to 67,000 bags.
In 2019/20, world coffee consumption is estimated at 166.06 million bags, 0.5% higher than in 2018/19. Although several countries have started to slowly reopen non-essential activities, out-of-home coffee consumption is anticipated to remain weak for some time.
Additionally, job losses could lower demand, particularly for non-habitual consumers. Production in 2019/20 is estimated at 167.91 million bags, which could exceed consumption by 1.85 to 3.42 million bags, depending on impact of covid-19.
