LONDON, UK – In November, the ICO composite indicator rose by 3.6% to 109.70 US cents/lb as prices for all group indicators increased, except Other Milds, which fell by 0.9% to 150.73 US cents/lb. According to the ICO Coffee Market Report for November 2020, wWorld coffee production in coffee year 2019/20 decreased by 1.6% to 168.55 million bags as a consequence a 5.1% decline in Arabica output to 95.73 million bags, while Robusta production rose by 3.2% to 72.82 million bags. South America’s production fell by 4.6% to 78.87 million bags, due largely to the decline in Brazil’s Arabica output in the off-year of the biennial crop cycle.
Production from Asia & Oceania grew by 4.1% to 50.07 million bags, due largely to the recovery of output in Indonesia and Viet Nam. Production in Central America & Mexico declined by 4.5% to 20.76 million bags, while Africa’s output remained stable at 18.86 million bags. World coffee production exceeded global consumption by 961,000 bags as world coffee demand decreased by 0.9% to 167.59 million bags.
After falling by 8.9% in October, the monthly average of the ICO composite indicator rose by 3.6% to 109.70 US cents/lb in November 2020. The daily composite indicator ranged between 103.77 US cents/lb and 108.72 US cents/lb in the first two weeks of the month. In the second
half of the month, however, it reached a low of 110.22 US cents/lb on 24 November and a high of 116.17 US cents/lb on 27 November. A delayed start to Viet Nam’s harvest, concerns over the prolonged drought in Brazil, and the damage caused by hurricanes Iota and Eta in Central America boosted prices in November, though the bearish outlook for the global economy limited further recovery.
Prices for all group indicators rose in November 2020, except Other Milds, which fell by 0.9% to 150.73 US cents/lb. The average price for Colombian Milds rose by 4.5% to 161.21 US cents/lb. As a result, the differential between Colombia Milds and Other Milds more than quadrupled from an average of 2.22 US cents/lb in October to 10.48 US cents/lb in November 2020. The average price for Brazilian Naturals grew by 6% to 106.41 US cents/lb while Robusta prices averaged 72.38 US cents/lb, 5.9% higher than in October 2020.
The average arbitrage in November, as measured on the New York and London futures markets, rose by 2.1% to 52.66 US cents/lb. Stocks of certified Arabica increased by 7.7% to 1.4 million bags in November 2020, which is the second consecutive month of increase. Certified Robusta stocks amounted to 2.25 million bags, 10.3% higher than in October 2020.
The volatility of the ICO composite indicator price decreased by 2.3 percentage points to 6.5% as the volatility of all group indicators decreased. The volatility for Colombian Milds declined by 2 percentage points to 6.2%, for Other Milds by 0.8 percentage points to 7%. and for Brazilian Naturals by 2.8 percentage points to 9.4% in November 2020. The volatility for Robusta prices reached 6.1%, 3.4 percentage points lower than in October 2020.
Global exports in October 2020, the first month of coffee year 2020/21, totalled 9.67 million bags, which represents an increase of 3.2% compared to October 2019, reports the ICO. Shipments of Robustas rose by 10.4% to 3.34 million bags and Arabicas fell by 0.3% to 6.33 million bags. Colombian Milds saw the largest decline, falling 12.3% to 1.16 million bags, while Other Milds declined by 6% to 1.43 million bags. Brazilian Naturals, conversely, saw an increase of 6.7% to 3.74 million bags compared to October 2019. The depreciation of the Brazilian Real against the US Dollar is a contributing factor for higher shipments of Brazilian Naturals while Robusta shipments are bolstered by sustained demand for soluble coffee.
For the first ten months of 2020, total exports are 3.8% lower at 107.08 million bags, compared to 111.28 million for the same period last year. Shipments for all groups declined, with the exception of Brazilian Naturals, which rose by 1% to 33.65 million bags. In January to October 2020, exports of Colombian Milds decreased by 11.2% to 10.93 million bags, while shipments of Other Milds fell by 10.8% to 21.86 million bags and those of Robusta dropped by 1.3% to 40.65 million bags.
World production in coffee year 2019/20 is estimated at 168.55 million bags, which is 1.6% lower than in 2018/19. Production of Robusta increased by 3.2% to 72.82 million bags with the largest increases in Viet Nam, Indonesia, and Uganda. Arabica production fell by 5.1% to 95.73 million bags, as increases in Colombia, Ethiopia, Indonesia, and Mexico could not offset losses in output from Brazil and Honduras.
Production in South America fell by 4.6% to 78.87 million bags and accounted for 46.8% of global output. The regional decline is largely due to the decrease in Brazil’s output, which fell by 6.1% to 59.5 million bags in 2019/20. Brazil’s Arabica output declined by 9.9% to 38.7 million bags, while Robusta rose by 2% to 20.8 million bags. Production in Colombia rose by 1.7% to 14.1 million bags, as replanted trees came into production and higher prices in several months encouraged farmers to harvest coffee. Peru’s output in 2019/20 declined by 4% to 4 million bags due to adverse weather and low prices leading farmers to turn to other crops with better returns.
Output from Asia & Oceania rose by 4.1% to 50.07 million bags. Viet Nam’s production increased by 4% to 31.5 million bags in 2019/20, of which around 5% is Arabica coffee. Indonesia’s production increased by 11.7% to 11.19 million bags in 2019/20, after three years of falling output. India experienced another fall in production in 2019/20 due to unfavourable weather, reaching 4.97 million bags, which is 6.7% lower than in 2018/19 and the third consecutive year of decrease.
Central America & Mexico’s harvest declined by 4.5% to 20.76 million bags. Production from Honduras dropped by 15.4% to 6.2 million bags in the 2019/20 as a result of falling prices, adverse weather, and an outbreak of coffee leaf rust. Mexico’s output increased by 8% to 4.7 million with support from the Mexican government to promote coffee plantation renewal, value addition and biodiversity conservation. Meanwhile, Guatemala’s production decreased by 6.4% to 3.75 million bags.
Africa’s output remained stable at 18.86 million bags in 2019/20. Increases in production from Ethiopia and from Uganda were offset by declines in the region’s next three largest producers. Ethiopia harvested 7.7 million bags, 2.1% more than in 2018/19, due to beneficial weather and adequate rain. Uganda’s production increased by 11.6% to 5.25 million bags as result of good weather and higher yields from new trees coming into production. Côte d’Ivoire’s output decreased by 18.4% to 2 million bags, Tanzania’s by 17.3% to 926,000 bags, and Kenya’s by 8.6% to 850,000 bags.
Global consumption from October 2019 to September 2020 is estimated to have fallen by 0.9% to 167.59 million bags, following an increase of 4.6% in 2018/19 to 169.11 million bags. As a result, a surplus of 961,000 bags is estimated for coffee year 2019/20, which limited recovery in the ICO indicator price for 2019/20 to an average of 107.25 US cents/lb, 6.7% higher than in 2018/19.