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ICO REPORT – Coffee Market ends 2014 at ten month low

Coffee prices continued to slide downwards in December 2014, with the monthly average of the ICO composite indicator at its lowest level since February.

Recent estimates from external sources, including the private sector and the USDA, have suggested that production in Brazil in crop year 2015/16 might recover relatively quickly.

The official Conab forecast has provisionally estimated production in 2015/16 at between 44.1 and 46.6 million bags, with production in 2014/15 revised up slightly to 45.3 million bags (7.7% less than 2013/14).

World production in crop year 2014/15 is provisionally estimated at 141.4 million bags, 3.6% less than the 146.8 million bags produced in 2013/14, which has also been revised upwards.

The daily price of the ICO composite indicator fell consistently in December, from a high of 160.43 US cents/lb on the first of the month, to a low of 142.29 cents on the 29th. The monthly average came to 150.66 cents, its lowest level in ten months.

In terms of the group indicators, the largest drop was registered in Brazilian Naturals, down 8.2% compared to November on 166.58 cents.

All groups were significantly lower, with Colombian Milds down 7.9%, Other Milds down 7.5%, and Robustas falling by 4.5%.

As a result, the arbitrage between the three Arabica groups and Robustas narrowed, with the monthly differentials down by over 10% compared to November. Price volatility was also somewhat lower in December for all price indicators.

World coffee production in 2014/15 is provisionally estimated at around 141.4 million bags, which would be a 3.6% decrease on the 146.8 million bags produced in 2013/14. This 2013/14 estimate has been revised upwards by around 1.5 million bags.

Production of both Arabica and Robusta coffee is expected to fall, by 3.7% and 3.6% respectively.

Download the full market report here (pdf file).