Monday 17 June 2024
  • La Cimbali

Ico indicator marked its 12th consecutive increase in October reaching new multi-year highs

Must read

  • TME - Cialdy Evo
Demuslab

LONDON, UK – Coffee prices continued to rise in October reaching new multi-year highs despite improved weather conditions in Brazil, says the ICO in its latest Coffee Market Report. The monthly average of the ICO composite indicator price was 181.57 US cents/lb, an increase of 6.8% as compared to 170.02 US cents/lb in September 2021. These price levels during coffee year 2020/21 mark a significant recovery from the low levels experienced over the three preceding coffee years.

In terms of market fundamentals, exports of all forms of coffee by all exporting countries to all destinations totalled 10.07 million 60-kg bags in September 2021, 4.9% lower than in September 2020. Total shipments of all forms of coffee over coffee year 2020/21 (October 2020 – September 2021) amounted to 129.03 million bags, an increase of 1.3% compared with 127.36 million bags during coffee year 2019/20.

Global coffee consumption for coffee year 2020/21 is estimated at 167.15 million bags, an increase of 1.9% over 164.02 million bags recorded in coffee year 2019/20. The projection for total production in coffee year 2020/21 is 169.64 million bags, representing a marginal increase of 0.4% on the 168.98 million bags harvested in coffee year 2019/20.

The projected total production of coffee year 2020/21 is 8.6% higher than the average of the last 10 coffee years. However, concerns over the supply from important origins still characterise market conditions, as climate-related shocks and covid-related disruptions continue to affect trade flows in many countries.

The monthly average of the ICO composite indicator rose by 6.8%, from 170.02 US cents/lb in September 2021 to 181.57 US cents/lb in October 2021. The level reached in October 2021 represents a 71.5% increase as compared to 105.85 US cents/lb recorded at the beginning of the last coffee year in October 2020.

Moreover, the average price of October 2021 is the highest since the mark of 182.29 US cents/lb recorded in February 2012. The steady upward trend observed since the start of coffee year 2020/21 shows how the recovery of coffee prices, after three consecutive years of low-price levels, reflects a substantial change in overall market conditions.

Gimoka

Prices for all group indicators increased in October 2021 and reached their highest levels in several years. The highest increase occurred in the Brazilian Naturals Group indicator price, which reached 199.98 US cents/lb, an increase of 8.9% as compared to 183.72 US cents/lb registered in the previous month and an increase of 99.2% from October 2020, and the highest level reached since 214.4 US cents/lb in February 2012.The price for the Colombian Milds increased by 7.7% to 258.87 US cents/lb in October 2021 as compared to 240.38 US cents/lb in September 2021. It also represents a rise of 67.8% from 154.28 cents/lb recorded in October 2020, and the highest level recorded since 287.54 US cents/lb in September 2011.

Prices for the Other Milds increased by 6.9% to 241.06 US cents/lb in October 2021 as compared to 225.54 US cents/lb in September 2021. A higher level has not been since 245.09 US cents/lb in November 2011. Moreover, compared to its level of 152.06 US cents/lb in October 2020, the Other Milds indicator increased by 58.5%. Robustas, priced at 105.24 US cents/lb in October, showed steady growth and increased by 0.6% in between September 2021 and October 2021. It is the highest level since 105.55 US cents/lb was reached in April 2014.

The differential between the Colombian Milds and Other Milds increased substantially, rising by 20.0% from 14.84 US cents/lb in September 2021 to 17.81 US cents/lb in October 2021. The differential between the Colombian Milds and Brazilian Naturals increased by 3.9%, from 56.66 US cents/lb in September 2021 to 58.89 US cents/lb in October 2021.

The differential between the Colombian Milds and Robustas increased by 13.1%, from 135.78 cents/lb in September 2021 to 153.63 US cents/lb in October 2021. The differential between the Other Milds and Brazilian Naturals decreased by 1.8% to 41.08 US cents/lb in October 2021 from 41.82 US cents/lb in September 2021.

The arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets, increased by 13.8% at 109.69 US cents/lb in October 2021, as compared with 96.39 US cents/lb in September 2021.

Although coffee prices continued to increase, volatility weakened in October 2021. Intra-day volatility of the ICO composite indicator price increased by 0.1 percentage points to 8.3% in October 2021. The Brazilian Naturals indicator showed a volatility of 10.7% in October 2021, as compared to 10.5% in September 2021.

The Colombian Milds recorded a level of volatility at 8.6% in October 2021, as compared to 9.1% recorded in September 2021. Volatility for the Other Milds increased slightly from 9.1% in September 2021 to 9.5% in October 2021. Robusta price had the lowest volatility at 5.3% in October 2021, as compared to 7.5% in September 2021.

The volatility of New York futures market was 11.1% in October 2021, as compared to 10.1% in September 2021. The volatility of London futures market decreased by 2.2 percentage points to 5.6%, as compared to 7.8% in September 2021.

Estimates of total production for coffee year 2020/21 remain unchanged at 169.64 million 60-kg bags, representing a 0.4% increase as compared to 168.980 million bags during the previous coffee year. While Arabica production increased by 2.3% to 99.26 million bags, a 2.1% reduction has been recorded in the production of Robusta coffee to 70.38 million bags.

At the regional level, African output will remain at the same level of 18.75 million bags recorded in previous coffee year. Production for Asia & Oceania is expected to fall by 1.1% from 49.45 million bags in 2019/20 to 48.91 million in 2020/21.

Production in Central America and Mexico is provisionally set to decrease by 2.1% at 19.19 million bags against 19.60 million bags in coffee year 2019/20. An increase of 1.9% in production is expected from South America at 82.79 million bags, as compared to 81.21 million bags in 2019/20.

Harvesting for crop year 2020/21 has been completed in all producing countries and the focus of the market is expected to turn to output from crop year 2021/22 as well as from 2022/23. The uncertainty created by weather-related shocks and potential disruptions in trade flows from stricter pandemic-related measures has become a serious threat to the regularity of green coffee supply.

Moreover, increasing transaction and production costs, including fertilizers and labour costs, along with substantial increases in the transport costs are expected to reduce growers’ current gains from increased prices and slow down investments in production.

World coffee consumption is resuming its steady growth of the last 10 years as before the outbreak of the covid-19 pandemic. It is projected to rise by 1.9% to 167.15 million bags in 2020/21 as compared to 164.02 million bags for coffee year 2019/20. With the prospect of further easing of pandemic restrictions related to covid-19 and subsequent expectations of economic recovery, world consumption is expected to continue growing.

Over the last 10 coffee years the average growth of world consumption has been 1.9% per year boosted by significant increase in emerging markets versus more stable trends in traditional coffee consuming markets. The inelasticity of world consumption is expected to tighten the demand and supply ratio and increase the possibility of the current upward trends of coffee prices continuing.

Exports of all forms of coffee in September 2021 totalled 10.07 million bags, down 4.9% compared to 10.60 million bags in September 2020. The 8.4% decline in the shipments of Arabica from 6.03 million bags in September 2020 to 5.52 million bags in September 2021 was not offset by a 0.8% decline of the Robusta coffee exports from 3.50 million bags in September 2020 to 3.47 million bags in September 2021.

The steepest decrease was recorded by Brazilian Naturals, down from 3.55 million bags in September 2020 to 2.77 million bags in September 2021. Over the same period, exports of the Other Milds and Colombian Milds increased by 5.8% and 22.8% respectively.

Cumulative exports of all forms of coffee during the coffee year 2020/21 (October 2020 –September 2021) increased by 1.3% to 129.03 million bags, as compared to 127.36 million bags during coffee year 2019/20. Cumulative exports of green coffee amounted to 116.87 million bags in coffee year 2020/21, an increase of 1.8% as compared to 114.83 million bags for coffee year 2019/20.

The pattern of total exports by exporting countries is still dominated by green coffee, which represented 90.6% and 90.2% of total exports, respectively, during coffee years 2020/21 and 2019/20.

In terms of regional performance during the coffee year 2020/21, cumulative shipments of South America increased by 3.2% to 59.52 million bags as compared to 57.67 million bags in 2019/20. Exports by Brazil increased by 5.0% to 43.04 million bags from 41.01 million bags in 2019/20.

Exports by Colombia remained relatively stable with a 1.5% from 12.64 million bags in the coffee year 2019/20 to 12.83 million bags for the 2020/21 coffee year. Total exports of Peru declined by 11.2% to 3.16 million in 2020/21 from 3.56 million in the same period in 2019/20. Exports of Asia & Oceania over the first twelve months of coffee year 2020/21 fell by 3.2% from 40.06 million bags in October 2019 to September 2020 to 38.76 million bags in 2020/21.

Exports decreased by 7.5% in Vietnam from 26.54 million bags in 2019/20 to 25.56 million bags in 2020/21. Exports of India increased by 12.0% from 5.13 million bags in 2019/20 to 5.96 million bags in 2020/21. Cumulative exports from Central America and Mexico during the first twelve months of coffee year 2020/21 increased by 5.1% to 16.80 million bags, as compared to 15.98 million bags over the same period during coffee year 2019/20.

Honduras is recovering steadily from two natural disasters caused by hurricanes Iota and Eta with its cumulative exports increasing by 6.7% to 5.87 million bags in 2020/21 as compared to 5.51 million bags in 2019/20. Nicaragua, which suffered the same climatic disasters as Honduras, has recorded a 4.5% decline of exports from 2.74 million bags in 2019/20 to 2.61 million bags in 2020/21.

Export volume increases of 12.7% and 4.3% were observed in Guatemala and Mexico, respectively. Costa Rica’s exports declined by 1.8%. An increase of 5.8% was also observed in El Salvador. Cumulative exports by Africa increased by 2.2% to 13.95 million bags as compared to 13.64 million bags in 2019/20. Exports rose in Uganda (21.4%), Tanzania (25.0%) and Kenya (5.9%). Over the same period exports decreased by 12.2% and 49.0% in Ethiopia and Côte d’Ivoire respectively.

CIMBALI

Latest article

  • Franke Mytico
  • Dalla Corte
  • DESCAMEX COFFELOVERS 2024