International Coffee Organization Blog

The increase in demand against a fall in production has resulted in an estimated global deficit of 0.63 million bags for 2019/20. The current tightness in the market is not likely to last throughout the year as more of the current crop as well as ample supplies from Brazil’s on-year crop in 2020/21 reach the market. This could limit further increases in coffee prices later in the coffee year. The increase in demand against a fall in production has resulted in an estimated global deficit of 0.63 million bags for 2019/20. The current tightness in the market is not likely to last throughout the year as more of the current crop as well as ample supplies from Brazil’s on-year crop in 2020/21 reach the market. This could limit further increases in coffee prices later in the coffee year. Coffee Market Prices Continued to Climb in December

The ICO composite indicator continued to rise in December 2019, ranging between 111.80 and 123.69 US cents/lb.  Prices for all Arabica indicators rose in December 2019, while Robusta prices decreased 0.1% to 73.22 US cents/lb. Firm demand and the current tightness in the market has helped to put upward pressure on prices. Exports in the first two months of coffee year 2019/20 declined by 10.8% to 18.3 million bags. Exports from all coffee groups decreased during this period, except Colombian Milds, which rose by 2.2% to 2.6 million bags. Global coffee output is estimated at 168.71 million bags in 2019/20, 0.9% lower than last year as Arabica production is estimated to decline by 4.1% to 96.22 million bags while Robusta grows by 3.7% to 72.5 million bags. In coffee year 2019/20, coffee consumption is estimated to increase by 1.24 million bags to 169.34 million bags. This would result in a deficit of 0.63 million bags in 2019/20, which puts upward pressure on prices. However, this may be limited as more of the 2019/20 crop enters the market as well as a larger crop is anticipated from Brazil in its 2020/21 crop year commencing in April.

The ICO composite indicator continued to rise in December 2019, peaking at 123.69 US cents/lb on 16 December 2019. The daily price of the ICO Composite averaged 117.37 US cents/lb in December, an increase of 9.5% from November, and is the highest monthly average since October 2017 when it reached 120.01 US cents/lb. During the month, the lowest level that the daily ICO composite indicator reached was 111.80 US cents/lb on 4 December, which was still higher than any of the monthly averages in the previous 18 months. Exports from Brazil have slowed in the past few months compared to a year ago while harvests from some origins with an October-September crop year were delayed.  This tightening of supply as well as strong demand has helped to put upward pressure on prices.

Prices for all Arabica indicators rose in December 2019, suggesting that the shortfall in the market is limited to Arabica coffee, particularly for higher quality growths. Brazilian Naturals saw the largest increase, of 14.9%, to 126.36 US cents/lb, as exports from Brazil have slowed. Other Milds rose 11.4% to 157.11 US cents/lb, while Colombian Milds rose 10.5% to 161.5 US cents/lb. The differential between Colombian Milds and Other Milds narrowed in December 2019, falling 14.6% to 4.39 US cents/lb. Prices for Robustas decreased 0.1% month-on-month to 73.22 US cents/lb, partly in anticipation of large volumes of Robusta from Viet Nam and Indonesia.

The spread between Arabica and Robusta coffees, as measured on the New York and London futures markets, increased to 67.57 US cents/lb, which is the fourth consecutive month of increase. The New York futures market (Arabica) rose 16% to an average of 131.44 US cents/lb in December 2019, the highest monthly average since September 2017, while the London futures market (Robusta) rose by 1.4% to 63.87 US cents/lb.  Certified Arabica stocks fell to their lowest levels since May 2018, reaching 2.32 million bags in December 2019. This is the ninth month in which certified Arabica stocks have fallen month-on-month, and suggests a tight supply of Arabica coffee.  

The volatility of the ICO composite indicator increased 2.6 percentage points to 9.7% over the past month. Among the Arabica group indicators, the volatility of Brazilian Naturals saw the biggest increase—of 2.9 percentage points—to 12.1%, while the volatility of Colombian Milds and Other Milds rose by 2.3 percentage points to 9.5% and 2.7 percentage points to 9.6%, respectively. The Robustas group indicator volatility was 8.8%, an increase of 2.6 percentage points from November 2019.

Global exports in November 2019 totalled 9.31 million bags, compared with 10.22 million in November 2018. Exports in the first two months of coffee year 2019/20 have decreased by 10.8% to 18.3 million bags compared to 20.51 million bags in the same period in 2018/19. During this period, shipments of Arabica fell 11% to 11.93 million bags and Robustas declined by 10.5% to 6.37 million bags.

In the past 10 years, global coffee production has grown at an average annual rate of around 2.6% from 140.16 million bags in 2010/11 to an estimated 168.71 million bags in 2019/20. Arabica production in the current coffee year is estimated to decrease by 4.1% to 96.22 million bags, which largely reflects the off-year of the biennial cycle of Arabica production in Brazil. However, world Robusta production is estimated to rise by 3.7% to 72.47 million bags. Globally, the three largest producers of all types of coffee are Brazil, Viet Nam, and Colombia, which are now accounting for nearly 70% of global production. A decade ago, these three countries represented just under 60% of the global output.

In crop year 2019/20, Brazil’s total production is estimated at 57 million bags, which is 12.2% lower than last year. This is due largely to a decline in its Arabica production, which is estimated to decrease by 18.6% to around 37 million bags while its Robusta output grows by 2% to around 20 million bags.  In the first eight months of its crop year, Brazil exported 26.95 million bags of coffee, of which 10.2% was processed coffee. During this same period, it shipped 21.28 million bags of green Arabica coffee and 2.94 million bags of green Robusta. While exports in the first 8 months are 14.1% higher than in April to November 2018, the pace has recently slowed. Brazil’s shipments of green Arabica reached 10.76 million bags in August to November 2019, 8% lower than the same period one year ago, which is more reflective of the current year’s crop.

Production in Viet Nam is expected to grow by 4.4% to 31.2 million bags in crop year 2019/20. Sufficient water for irrigation during the growing season is expected to boost productivity. Exports in the first two months of its crop year are estimated at 3.25 million bags, 27.6% lower than in the first two months of 2018/19. This decline can be attributed to prevailing low domestic prices, which are causing farmers to hold onto their coffee, and to heavy rains at the start of the season which delayed harvesting.

Colombia is the world’s second largest producer of Arabica, and its harvest in 2019/20 is forecast to reach 14.1 million bags, 1.7% higher than in 2018/19. In the first two months of crop year 2019/20, the National Federation of Colombian Coffee Growers reported that Colombia produced 2.88 million bags, 20.5% higher than the previous year. During the same period, Colombia shipped 2.37 million bags of coffee in the first two months of its crop year, 3.1% higher than one year ago, and these likely included sales from last year’s crop as farmers were encouraged by higher prices.  

The long-term average annual growth rate for coffee demand is 2.2% as consumption has risen from 90.71 million bags to an estimated 169.34 million bags in 2019/20.  Compared to one year ago, global demand growth in 2019/20, projected at 0.7%, is 2.7 percentage points less than in 2018/19, but still represents an increase of 1.24 million bags in overall demand. This also follows an increase of 3.4% to 168.1 million bags in 2018/19, which was above the long-term average. The result in 2018/19 was mainly due to growth in both Europe and North America where consumption rose by 4.9% to 55.73 million bags and by 5.7% to 31.64 million bags, respectively. Lower prices during the past coffee year likely supported greater imports and consumption in these countries, but may slow in the current year as prices have risen. Further, a slowdown in global economic growth, particularly for emerging markets and developing economies, as described by the International Monetary Fund in its October 2019 World Economic Outlook, could dampen growth in coffee consumption. In 2019/20, demand is expected to decline by 0.6% to 55.4 million bags in Europe. In its Autumn 2019 Economic Forecast, the European Commission noted that the European Union was facing a number of shocks that would likely impair economic growth in the next year. Consumption in North America is estimated to reach 31.88 million bags, 0.7% higher than in 2018/19. After a lower rate of growth in 2018/19, consumption in Asia & Oceania is projected to partially recover, growing by 2.9% to 37.51 million bags. Demand in Africa is forecast to increase by 1.8% to 11.94 million bags, in Central America & Mexico by 1.4% to 5.47 million bags, and in South America by 0.1% to 27.14 million bags.

The increase in demand against a fall in production has resulted in an estimated global deficit of 0.63 million bags for 2019/20. The current tightness in the market is not likely to last throughout the year as more of the current crop as well as ample supplies from Brazil’s on-year crop in 2020/21 reach the market. This could limit further increases in coffee prices later in the coffee year.

Explanatory Note for Table 3

For each year, the Secretariat uses statistics received from Members to provide estimates and forecasts for annual production, consumption, trade and stocks. As noted in paragraph 100 of document ICC 120-16, these statistics can be supplemented and complemented by data from other sources when information received from Members is incomplete, delayed or inconsistent. The Secretariat also considers multiple sources for generating supply and demand balance sheets for non-Members.

The Secretariat uses the concept of the marketing year, that is the coffee year commencing on 1 October of each year, when looking at the global supply and demand balance. Coffee-producing countries are located in different regions around the world, with various crop years, i.e. the 12-month period from one harvest to the next. The crop years currently used by the Secretariat commence on 1 April, 1 July and 1 October. To maintain consistency, the Secretariat converts production data from a crop year basis to a marketing year basis depending on the harvest months for each country. Using a coffee year basis for the global coffee supply and demand, as well as prices ensures that analysis of the market situation occurs within the same time period.

For example, the 2014/15 coffee year began on 1 October 2014 and ended 30 September 2015. However, for producers with crop years commencing on 1 April, the crop year production occurs across two coffee years. Brazil’s 2014/15 crop year began on 1 April 2014 and finished 31 March 2015, covering the first half of coffee year 2014/15. However, Brazil’s 2015/16 crop year commenced 1 April 2015 and ended 31 March 2016, covering the latter half of coffee year 2014/15. In order to bring the crop year production into a single coffee year, the Secretariat would allocate a portion of the April-March 2014/15 crop year production and a portion of the April-March 2015/16 production into 2014/15 coffee year production.

November 2019 marked the first time in the last 12 months when the ICO Composite Indicator consistently stayed over 100 US cents/lb. The monthly average of the Indicator rose 10.1% to 107.23 US cents/lb amid expectations of a global deficit in coffee year 2019/20, estimated at 502,000 bags. Global exports of coffee in October 2019 fell by 13.4%, to 8.91 million bags, compared to the same month in the previous year. A mix of factors, including unfavourable weather patterns and prolonged low international prices, have contributed to a decline in shipments across all regions.

The ICO composite indicator rallied in November 2019, reaching a 12-month high, even as the Brazilian Real slumped to a record low against the US Dollar. The daily price of the ICO composite rose from 102.74 US cents/lb at the beginning of November to a high of 111.86 on 25 November 2019, before closing the month at 111.77 US cents/lb. While the daily price has been on an upward trend since mid-October 2019, the November average of 107.23 US cents/lb was 10.1% higher than last month.

Prices for all group indicators rose in November 2019. Brazilian Naturals saw the largest increase, of 12.1%, to 109.94 US cents/lb, reflecting in part the biennial decline in the production of Brazilian Arabica as well as the weakness of the Brazilian currency. Other Milds rose 11% to 140.98 US cents/lb, while Colombian Milds rose 10.6% to 146.12 US cents/lb. The differential between Colombian Milds and Other Milds continued its ascent in November 2019, rising 0.8% to 5.14 US cents/lb. Prices for Robustas increased 6.8% month-on-month to 73.28 US cents/lb.

Arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets, increased sharply to 50.31 US cents/lb, its highest level since January 2017. The New York futures market rose 10.6%, to an average of 113.31 US cents/lb in November 2019, as certified stocks fell to their lowest level since June 2018, while the London futures market climbed 8% to 63 US cents/lb.

The volatility of the ICO composite indicator increased by 0.9 percentage points to 7.1% over the past month. Amongst the Arabica group indicators, the volatility of Colombian Milds saw the biggest increase—of 1.2 percentage points—to 7.2%, while the Other Milds’ and Brazilian Naturals’ volatility increased 0.8 percentage points to 6.9% and 1.1 percentage points to 9.2%, respectively. The Robustas group indicator registered an increase of one percentage point in its volatility, to 6.2%, due to uncertainties over the October-September crop and Brazil’s upcoming 2020/21 crop.

Global exports in October 2019 totalled 8.91 million bags, their lowest monthly level since September 2017. This represents a drop of 13.4% compared to the same period in the previous year, and of 2.4% compared to October 2017. Shipments of Robustas fell 21.6% to 2.82 million bags and Arabicas fell 9% to 6.08 million bags. Other Mild Arabicas saw the largest decline, falling 23.2% to 1.33 million bags, while Brazilian Naturals fell 9.5% to 3.44 million bags. Colombian Milds, conversely, saw an increase of 13.5% to 1.31 million bags compared to October 2018. The depreciation of the Colombian Peso against the US Dollar for much of 2019 could be a contributing factor for higher shipments of Colombian Milds.

Exports from South America amounted to 5.29 million bags in October 2019, led by 3.42 million bags from Brazil. Brazil’s exports—which accounted for 38.4% of the total coffee exports in October 2019—fell 12.9% compared to October 2018, owing to its smaller 2019/20 off-year crop. Despite the monthly fall in shipments compared to 2018, Brazil’s export total to date for its 2019/20 crop year is at a record level of 23.62 million bags. This is 7.2% greater than its next highest level of 22.04 million bags, reached in April–October 2014.

At 1.21 million bags, Colombian exports grew 13.9% in October 2019 compared to the same month in 2018. Green coffee exports rose 15.5% as the main harvest began, while the small but steadily growing volumes of roasted coffee exports grew 41.4% to 16,934 bags. Exports of soluble coffee fell 9.2% compared to October 2018. However, the year-to-date total of 672,791 bags was the second highest total of soluble exports for Colombia for the period. The United States continues to be the major destination for Colombian coffee, accounting for 44.8% of its October 2019 exports. It was followed by Germany, which accounted for 9.2% of the total coffee exports in the month.

Exports from Asia & Oceania fell by 23.5% to 2.26 million bags in October 2019. The decline chiefly reflects smaller shipments from Viet Nam, whose Ministry of Agriculture and Rural Development estimated exports of 1.45 million bags for the month. The sharp fall in exports was accompanied by reports of farmers delaying sales of their beans due to low domestic prices for coffee. A decline in shipments was also observed in India, where production has been affected by erratic weather patterns, heavy rains and flooding for the past two years. Local reports have additionally attributed lower harvests to an increased incidence of the white stem borer earlier in the year. Exports from India were estimated at 350,000 bags in October 2019, 2.5% below the same period a year earlier and 22% below the same period in 2017. Meanwhile, exports from Indonesia—which had fallen in coffee year 2018/19 amid tightening supplies from Sumatra—more than doubled to 342,464 bags in October 2019.

Uganda’s exports of 378,238 bags led shipments from African countries, followed by Ethiopia. The total volume of exports from the region was 958,055 bags. In comparison with the same month in the previous year, Arabica exports from Uganda fell 30% to 75,501 bags, while Robusta exports rose by 24.6% to 302,737 bags. Exports of Arabica from Uganda have declined for most of 2019, dropping 16.6% in the first ten months compared to the same period in 2018. However, the increase in Robusta exports have more than offset the fall, and as a result total exports from the country increased 7.4% for the same period. The Uganda Coffee Development Authority attributed this increase to good main and secondary harvests on account of favourable weather in 2019.

With an export volume of 403,635 bags, Mexico & Central America started the coffee year with a 17.3% decline in shipments compared to October 2018. The region’s total exports were dragged down by falling shipments from Costa Rica, Honduras and Mexico. Honduras—which is Central America’s largest Arabica producer, and the world’s fourth largest—saw its shipments fall by 25.8% to 74,980 bags. Besides falling prices, harvests in the country are reported to have been affected by an increased incidence of pests and diseases, as well as an ongoing drought that led to the declaration of a national emergency in September. Elsewhere in the region, Costa Rica’s shipments dropped by 66.2%, to 11,853 bags, which was its lowest monthly export volume since August 1980. The fall is expected to continue into November 2019 as the country reels from a recent outbreak of coffee leaf rust.

The ICO maintains its preliminary forecast of a small global deficit of about 502,000 bags in coffee year 2019/20. Despite a slowdown in growth, consumption is predicted to overtake production during the course of the year. Most of the growth in consumption, in both absolute and relative terms, is expected to come from Asia & Oceania. On the production side, Brazil’s smaller off-year Arabica crop and adverse weather in parts of Central America and Asia could continue to affect prices in the coming weeks. However, the impact of these factors may be muted due to the recent weakness of the Brazilian Real as well as the upcoming on-year crop in Brazil.

World coffee production in coffee year 2019/20 is projected 0.9% lower at 167.4 million bags with a 2.7% decline in Arabica output to 95.68 million bags, while Robusta production is expected to rise by 1.5% to 71.72 million bags. South America’s production is expected to fall by 3.2% to 78.08 million bags, due largely to the decline in Brazil’s Arabica output in its off-year of the biennial crop cycle. Production from Asia & Oceania is projected to grow by 1.9% to 49.58 million bags due largely to a recovery in Indonesia’s output while Viet Nam is expected to remain stable. Central America & Mexico could see an increase of 0.9% to 21.54 million bags while Africa’s output is estimated to decline by 0.6% to 18.2 million bags. World coffee consumption growth is likely to slow in 2019/20 in line with the slower growth expected for the global economy, and demand is projected to increase by 1.5% to 167.9 million bags.

The ICO composite indicator edged downward in October 2019 to 97.35 US cents/lb, decreasing 0.4% from September 2019. It ranged between 93.63 US cents/lb and 101.56 US cents/lb, exceeding 100 US cents/lb only on 1, 3, and 31 October. The market is currently well-supplied as Brazil has completed the harvest of its 2019/20 off-year crop, which fills the gap before the output from the October-September producers reaches the market.

Prices for all group indicators, except Colombian Milds, fell in October 2019. Colombian Milds rose by 0.1% to 132.09 US cents/lb while Other Milds fell by 1.5% to 126.99. As a result, the differential between Colombia Milds and Other Milds increased by 69.4% to 5.10 US cents/lb. The last time the differential had exceeded this was in February 2018 when it reached 5.22 US cents/lb. Brazilian Naturals fell by 0.6% to 98.10 US cents/lb while Robustas decreased to 68.63 US cents/lb, 2.8% lower than in September 2019.

Arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets, increased by 3.7% to 44.07 US cents/lb. The New York futures market decreased by 0.4% to 102.41 US cents/lb while the London futures market experienced a steeper decline of 3.3% to 58.34 US cents/lb. The volatility of the ICO composite indicator price fell by just 0.1 percentage points to 6.2% over the last 30 days. The volatility for Colombian Milds and Other Milds remained unchanged from last month at 6.0% and 6.1%, respectively. Brazilian Naturals volatility decreased by 0.1 percentage points to 8.1%, and the volatility for Robustas, which accounts for 37% of the composite indicator price, decreased by 1 percentage point to 5.2%.

Global exports in September 2019 declined by 3.1% to 9.29 million bags. Robusta shipments fell by 12.9% to 3.02 million bags, and Colombian Milds decreased by 8.5% to 1.08 million bags. However, exports of Other Milds increased by 5% to 1.98 million bags while Brazilian Naturals grew by 5.2% to 3.21 million bags. Despite the fall in September shipments, total exports for coffee year 2018/19 reached a new record of 129.43 million bags, 8.1% higher than in 2017/18. Shipments of both Arabica and Robusta increased in 2018/19, by 12.3% to 85.01 million bags and 0.9% to 44.43 million bags, respectively.

World production in coffee year 2018/19 is estimated at 169 million bags, which is 5.4% greater than in 2017/18. Production of Robusta increased 11% in 2018/19 to 70.67 million bags. Arabica production rose by 1.7% to 98.33 million bags, as declines from Honduras, Mexico and Peru offset the increase from Brazil.  Not only did Brazil’s Arabica output increase, but its Robusta production also expanded for the second consecutive year following a downturn in 2016/17. This increase led the growth in South America’s production, which rose by 8.1% to 80.69 million bags in 2018/19. Output in Central America & Mexico declined by 1.7% to 21.35 million bags. However, production in Africa and Asia & Oceania increased by 5.3% to 18.30 million bags and 4.4% to 48.66 million bags, respectively.

World production in coffee year 2019/20 is projected to fall by 0.9% to 167.4 million bags. While Robusta output is projected to rise by 1.5% to 71.72 million bags, Arabica output is anticipated to decrease 2.7% to 95.68 million bags. The decline in Arabica production is largely due to Brazil as its 2019/20 crop is in the off-year of its biennial cycle. As a result of this downturn, production in South America could decrease by 3.2% to 78.08 million bags. Output from Colombia is estimated to increase by 1% to 14 million bags, slightly higher than the volume produced in the last two years.

Output from Asia & Oceania is estimated to rise by 1.9% to 49.58 million bags. Viet Nam’s output is anticipated to remain stable at 31.2 million bags in 2019/20.  Indonesia’s production declined by 13.2% in crop year 2018/19, but is projected to recover by 16.8% to 11 million bags in 2019/20. India may experience another fall in production in 2019/20 due to unfavourable weather, reaching 5.31 million bags, which is 0.3% lower than in 2018/19 and the third consecutive year of decrease.

Central America & Mexico’s harvest is projected to grow by 0.9% to 21.54 million bags. Production from Honduras is projected to decrease by 0.4% to 7.3 million bags while Mexico’s output could increase by 1.1% to 4.4 million bags. After a decline of 134,000 bags in 2018/19 due to unfavourable weather, production from Costa Rica is projected to rise by 8.6% to 1.55 million bags.

Africa’s output is projected to decline by 0.6% to 18.2 million bags. Increases in production from Ethiopia of 1.2% to 7.55 million bags and from Uganda of 1% to 4.75 million bags will likely be offset by declines from other African producers. Côte d’Ivoire’s output is projected to decrease by 4.1% to 2 million bags, following an increase of 41.6% to 2.09 million bags in 2018/19. Tanzania could see a decrease of 17.9% to 924,000 bags in 2019/20 as its Arabica crop enters an off-year.

Compared to an average annual rate of 2.1% in the previous 10 years, growth in global consumption in 2018/19 and 2019/20 is estimated to be slower. World consumption in 2018/19 grew 1.7% to 165.35 million bags, and in 2019/20, it is expected to rise by 1.5% to 167.9 million bags. Global coffee demand is expected to be affected by a slowdown in global economic growth, particularly for emerging markets and developing economies, as described by the International Monetary Fund in its October 2019 World Economic Outlook. In 2019/20, coffee demand in Asia & Oceania is projected to grow by 3% to 37.84 million bags, and in North America by 1.7% to 30.97 million bags. Africa’s demand for coffee is estimated to grow by 1.8% to 11.94 million bags, and Central America & Mexico’s demand by 1.4% to 5.47 million bags and Europe’s by 1.2% to 54.54 million bags. However, consumption in South America is likely to remain stable at 27.14 million bags in 2019/20.

On 15 October 2019, the official Curtain Raiser of the 5th World Coffee Conference was held in New Delhi, India. Attended by 150 dignitaries from across 23 countries, the ICO's Executive Director was joined on the podium by H.E. Shri Piyush Goyal – the Honourable Minister for Commerce and Industry and Railways, H.E. Shri Jagadish Shettar – Honourable Minister for Large and Medium Scale Industries from the Government of Karnataka, Shri Anup Wadhawan – Commerce Secretary of the Ministry of Commerce, Shri Srivatsa Krishna – Secretary of the Coffee Board of India, and Shri Anil Kumar Bhandari – President of the India Coffee Trust.

Mr Sette remarked in his speech that India was eminently qualified to host the 5th World Coffee Conference at such a crucial time for the coffee sector due to the continued downward trend in coffee prices and the severe economic and social consequences for producing countries. With the theme of ‘Sustainability through Consumption’ as Asia in general and India in particular were key markets for world coffee consumption, the Conference will discuss how to tackle the challenges faced by the world coffee sector as well as hold the second CEO and Global Leaders Forum, bringing together high-level executives from the private sector to discuss concrete actions for the betterment of all coffee stakeholders. Mr Sette’s full speech is available at: http://www.ico.org/documents/cy2019-20/ed-2322e-speech-ed-launch-5th-wcc-india.pdf

The 5th World Coffee Conference and the 127th Session of the International Coffee Council will take place from 7-12 September 2020 in Bengaluru, India. More information, including how to register: http://www.wcc2020.com/

World coffee production in coffee year 2018/19 is estimated to be 3.7% higher than in the previous year at 168.87 million bags, as output of Arabica increased by 1.8% to 102.68 million bags and Robusta grew 6.7% to 66.04 million bags. The larger supply in coffee year 2018/19 is reflected in increased shipments in the first eleven months of the coffee year, during which global exports increased by 9.2% to 120.28 million bags, surpassing the total volume shipped in 2017/18. In coffee year 2018/19, world consumption is estimated to be 2.1% higher at 164.82 million bags, but coffee production exceeded this by 4.05 million bags. This surplus is a major factor in the low prices this season. The ICO composite indicator fell to 97.74 US cents/lb in September 2019, and it averaged 100.47 US cents/lb in coffee year 2018/19. Prices for the Arabica group indicators rose in September 2019, while the Robusta indicator fell to its lowest monthly average since April 2010, decreasing to 70.64 US cents/lb in September 2019.

The ICO composite indicator averaged 97.74 US cents/lb in September 2019, increasing 1.7% from August 2019. It reached its lowest point of 94.01 US cents/lb in the month on 5 September. It peaked at 100.29 US cents/lb on 16 September, which is the only day that the indicator exceeded 100 US cents/lb in September 2019.

Prices for the Arabica group indicators rose in September 2019. Brazilian Naturals saw the largest increase, climbing 3% over the month to an average of 98.73 US cents/lb. The Colombian Milds and Other Milds indicators increased by 2.1%, to 131.90 US cents/lb and 128.89 US cents/lb, respectively. The group indicator for Robustas, on the other hand, dropped to its lowest monthly average since April 2010, falling 0.2% to 70.64 US cents/lb in September 2019. A consecutive two-year increase in Robusta production, driven primarily by Brazil and Viet Nam, has contributed to the decline.

Arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets, increased by 9.1% to 42.50 US cents/lb, pushed both by a 2.9% increase in the New York futures market and a 1% decline in the London market. The decline drove the London futures market to its lowest level since March 2010, mirroring the fall in Robusta indicator prices. Additionally, certified stocks on the London futures market increased for the sixth consecutive month to 2.62 million bags in September 2019. This is 1.11 million bags higher than their level in September 2018.

Intra-day volatility of the ICO composite indicator price fell by 0.6 percentage points to 6.3%, as the intra-day volatility of all Arabica group indicators declined: 0.6 percentage points to 6.0% for Colombian Milds, 1.1 percentage points to 6.1% for Other Milds and 1.1 percentage points to 8.2% for Brazilian Naturals. The intra-day volatility of Robusta increased to 6.2%, 0.6 percentage points higher than August 2019.

World production in coffee year 2018/19 is estimated to be 3.7% higher at 168.87 million bags, which includes part of the new crop for producing countries with crop years commencing in April and July. Production of both Arabica and Robusta increased in 2018/19, though the majority of the increase came from Robusta, which grew 6.7% to 66.04 million bags compared to coffee year 2017/18.  Arabica production increased by 1.8% to 102.68 million bags.

Output rose in all regions except for Mexico & Central America, where the harvest declined by 0.8% to 21.47 million bags. Nearly half of the world’s coffee was produced in South America, where production is estimated 4.8% higher at 80.95 million bags in coffee year 2018/19. Production grew by 4.6% in Asia & Oceania to 48.46 million bags, while output in Africa rose by 1.9% to 17.99 million bags.  

The larger supply in coffee year 2018/19 is reflected in increased shipments. In the first eleven months of coffee year 2018/19, world coffee exports were 9.2% higher than in the same period for coffee year 2017/18, amounting to 120.28 million bags. Arabica shipments for October 2018 through August 2019 are 11.3% higher than in 2017/18, as increased exports of Colombian Milds and Brazilian Naturals more than offset declines in shipments of Other Milds. Colombian Milds rose by 8.6% to 13.88 million bags, while Brazilian Naturals grew by 25.4% to 38.57 million bags. The majority of Colombian Milds is exported by Colombia, and its shipments rose by 7.8% to 12.53 million bags in October 2018 to August 2019. Tanzania and Kenya also shipped more coffee during this period, with their exports rising by 47.4% to 1.04 million bags and by 11% to 743,203 bags, respectively. An increase of 31.1% to 38.72 million bags from Brazil led the growth in shipments of Brazilian Naturals. However, shipments from Ethiopia, the second largest exporter of Brazilian Naturals, decreased by 4.8% to 3.23 million bags.

Exports of Other Milds fell by 4.1% to 24.99 million bags in October 2018 to August 2019. Shipments decreased in six of the ten largest members of this group during this period. Exports from Honduras fell by 5.1% to 6.57 million bags, from Peru by 7.3% to 3.14 million bags and from Mexico by 11.7% to 2.53 million bags. However, Guatemala’s shipments during this period rose by 5% to 3.34 million bags, and exports from Nicaragua rose by 13.2% to 2.64 million bags.

Robusta shipments increased by 5.6% to 42.84 million bags in the first eleven months of coffee year 2018/19. Viet Nam is the world’s largest exporter of Robusta coffee and its total shipments increased by 3.9% to 24.97 million bags. However, India’s exports declined by 5.6% to 5.62 million bags, and Indonesia’s exports decreased by 9.8% to 4.82 million bags. Uganda’s exports remained stable, increasing by 0.6% to 4.09 million bags in October 2018 to August 2019. Côte d’Ivoire’s shipments grew by 49.1% to 1.62 million bags, which more than offsets the 8.4% decrease in exports from the Lao People’s Democratic Republic, amounting to 323,291 bags.

While shipments to date for the coffee year are higher, exports in August 2019 decreased by 4% to 10.45 million bags compared to August 2018. Arabica shipments decreased by 2.3% to 6.54 million bags, and Robusta by 6.6% to 3.9 million bags. The decrease in Arabica shipments was led by Other Milds, which fell by 15.3% to 1.99 million bags in August 2019, while exports of Brazilian Naturals remained stable at 3.27 million bags. Exports of Colombian Milds, however, rose by 18.3% to 1.29 million bags.

Global coffee consumption is estimated to have risen by 2.1% in coffee year 2018/19 at 164.82 million bags. Consumption in importing countries grew by 2.4% to 114.51 million bags while exporting countries’ consumption rose by 1.3% to 50.31 million bags, which represents 30.5% of world consumption.

Coffee production in 2018/19 exceeded global consumption by 4.05 million bags, which marks the second year of surplus. The total cumulative surplus is 5.48 million bags. This surplus has contributed to the low prices this coffee year, with the composite indicator averaging 100.47 US cents/lb for October 2018 to September 2019. In comparison, the average for the composite indicator in 2017/18 was 111.51 US cents/lb, and in 2016/17 was 132.43 US cents/lb. Additionally, exports in coffee year 2018/19 set a new record and put further pressure on prices. The total volume shipped in the first eleven months of coffee year 2018/19, 120.28 million bags, has already surpassed the total volume shipped in coffee year 2017/18.

he ICO composite indicator fell by 6.7% to 96.07 US cents/lb in August 2019, compared to July 2019 and by 13.6% from a high of 111.21 US cents/lb in October 2018. The daily composite indicator has averaged 100.72 US cents/lb for coffee year 2018/19 through 30 August 2019.  Total exports in July 2019 amounted to 11.34 million bags, 9.5% higher than July 2018 while shipments in the first ten months of coffee year 2018/19 reached 109.41 million bags, 10.2% higher than the same period last year. Ample supplies from a 3.9% increase in global production to 169.73 million bags have fuelled exports. The majority of coffee continues to be exported as green coffee, accounting for 91.3% of total coffee shipped between October 2018 and July 2019. Global coffee demand is estimated to grow by 2.1% to 164.77 million bags, with growth in Asia & Oceania and Africa outpacing other regions. However, 2018/19 is estimated to end with a surplus of 4.96 million bags, making it the second consecutive year of surplus. The cumulative oversupply over the last two seasons is estimated at 7 million bags, which is one of the main explanatory factors for current low coffee price levels.

The ICO composite indicator averaged 96.07 US cents/lb in August 2019, dropping 6.7% from July 2019. Since the high of 111.21 US cents/lb in October 2018 at the start of the coffee year, the monthly ICO composite indicator has fallen by 13.6%. In August, the daily composite indicator ranged between a low of 94.29 US cents/lb on 19 August and a high of 97.43 US cents/lb on 8 August. Oversupply continues to burden the market, putting downward pressure on prices.

Prices for all group indicators fell in August 2019. After recovering 4.7% last month, prices for Brazilian Naturals declined by 9.1% to 95.85 US cents/lb as worry over adverse weather dissipated. Other Milds decreased by 6.8% to 126.23 US cents/lb while Colombian Milds fell 6.1% to 129.2 US cents/lb. Given the larger decrease in Other Milds prices, the differential between Colombian Milds and Other Milds rose by 37.5% to 2.97 US cents/lb. Robusta prices decreased by 4.3% to 70.78 US cents/lb, which is the lowest monthly average in the last 12 months.

In August, the arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets, decreased for the first time in four months to 38.97 US cents/lb, 11.8% lower than in July 2019. Intra-day volatility of the ICO composite indicator price fell by 2.3 percentage points to 6.9% as the intra-day volatility of all group indicators declined. Amongst the Arabica group indicators, the intra-day volatility of Brazilian Naturals decreased by 2.7 percentage points to 9.3%, of Other Milds by 2.5 percentage points to 7.2%, and of Colombian Milds by 2.1 percentage points to 6.6%. The intra-day volatility of Robusta declined to 5.6%, 1.3 percentage points lower than last month.

Global coffee production in coffee year 2018/19 is estimated at 169.73 million bags, an increase of 3.9% from 2017/18. Production in South America is estimated 4.9% higher at 81.13 million bags, which includes an upward revision of just under a million bags for Brazil from last month. Output from Asia & Oceania is estimated to rise by 4.1% to 48.68 million bags, and from Africa to increase by 2.9% to 18.21 million bags. Production in Mexico & Central America is estimated just 0.4% higher at 21.72 million bags.

In July 2019, world coffee exports rose by 9.5% to 11.34 million bags compared to July 2018, supported by ample supplies and higher prices. Global exports in the first ten months of coffee year 2018/19 grew by 10.2% to 109.41 million bags. Shipments of Brazilian Naturals rose by 27.6% to 35.08 million bags in October 2018 to July 2019. Colombian Milds increased by 7.6% to 12.59 million bags while Robusta exports increased by 6.9% to 38.90 million bags in the first ten months of the coffee year. Other Milds reached 22.83 million bags, 3.7% lower than in October 2017 to July 2018.

In the first ten months of coffee year 2018/19, green coffee exports represented 91.3% of total exports, amounting to 99.86 million bags. This current trend is only slightly lower than that observed three decades ago, when green exports accounted for around 95% of total exports, indicating that much value addition remains in importing countries. Soluble coffee shipments accounted for 8.3% of the total while roasted coffee shipments represented just 0.4%. Total exports of soluble coffee reached 9.06 million bags and roasted coffee exports reached 487,080 bags in the first ten months of coffee year 2018/19.

In October 2018 to July 2019, Brazil shipped 31.83 million bags of green coffee, 38.4% higher than the same period one year ago, and accounted for around 31.9% of all green coffee shipments. Green coffee exports from Viet Nam reached 22 million bags in the first ten months of coffee year 2018/19, representing 22% of the total and making it the second largest exporter of green coffee. Colombia’s green coffee exports rose by 7.1% to 10.52 million bags as production increased. However, green exports from both Honduras and Uganda fell, declining by 2.3% to 6.29 million bags and by 3.1% to 3.6 million bags, respectively. The main destinations for green coffee were the United States, Germany, Belgium, Italy, and Japan. The total volume shipped to these five countries reached 32.48 million bags, accounting for 32.5% of all green exports in October 2018 to July 2019.

Mexico, Colombia, Viet Nam, Brazil, and the Dominican Republic represent the five largest exporters of roasted coffee among coffee producing countries, accounting for 92.7% of total roasted coffee exports in the first ten months of coffee year 2018/19. Mexico shipped 183,832 bags of roasted coffee while Colombia exported 124,560 bags.  Viet Nam’s exports of roasted coffee declined by 19.8% to 116,407 bags, and Brazil’s exports of roasted coffee decreased by 1.1% to 15,874 bags. However, the Dominican Republic increased its roasted coffee shipments by 45.9% to 11,054 bags. The United States was the main destination for shipments of roasted coffee, accounting for around 60% of the total during the first ten months of 2018/19.

Brazil was the largest exporter of soluble coffee in October 2018 to July 2019, with shipments reaching 3.29 million bags, 10.7% higher than the same period one year ago. India exported 1.59 million bags, 10.3% lower than the first ten months of coffee year 2017/18. Soluble exports from Viet Nam rose by 48% to 1.06 million bags.  Indonesia’s soluble shipments declined by 20.5% to 990,279 bags while Mexico’s soluble exports fell by 6.5% to 674,988 bags. The United States, the Russian Federation, the Philippines, Germany and Poland were the main destinations for soluble shipments in October 2018 to July 2019.

While the share of processed coffee has not changed much in the last three decades, processing coffee at origin can add value, as evidenced by the higher unit values for processed coffee compared to those for green coffee. For example, processing green coffee can double the unit value for Brazil’s exports, while the unit value for Colombia’s processed coffee is around 60-75% greater than those for green coffee. The monthly average unit values for green coffee exported by Brazil and Colombia in 2018/19 were 94.66 US cents/lb and 139.07 US cents/lb, respectively. In comparison, the average unit values for roasted coffee from Brazil were 224.30 US cents/lb and from Colombia were 247.76 US cents/lb. The average unit value for Brazil’s soluble coffee exports were 210.44 US cents/lb and for Colombia’s soluble exports were 221.82 US cents/lb. This value addition, whether for local consumption or new export markets, can take advantage of the sustained demand growth in the coffee sector.  

Coffee consumption in 2018/19 is estimated to rise by 2.1% to 164.77 million bags, which is in line with the average annual growth rate of 2.2% over the last two decades. Consumption in Asia & Oceania is estimated to rise by 3.7% to 35.84 million bags while Africa’s consumption is set to increase by 3% to 11.88 million bags. Demand in these two regions is growing faster than the long-term average, and includes both producing countries as well as emerging markets. Demand in North America is estimated to grow by 2.2% to 30.61 million bags, in Europe by 1.5% to 53.97 million bags and in South America by 1.1% to 27.27 million bags. Mexico & Central America’s consumption is estimated 0.2% higher at 5.21 million bags.

Given the greater growth in production compared to consumption, 2018/19 is expected to end in a surplus of 4.96 million bags. Coffee year 2017/18 also ended in surplus, resulting in a cumulative total of 7 million bags.

The monthly average of the ICO composite indicator rose by 3% to 103.01 US cents/lb in July 2019, which is the highest monthly average since November 2018. However, the daily composite indicator started at a high of 107.87 US cents/lb on 4 July and fell to 98.57 US cents/lb by the end of the month.  In June 2019, world coffee exports rose by 2.8% to 10.94 million bags compared to June 2018, while exports in the first nine months of coffee year 2018/19 rose by 6.5% to 97.28 million bags. World production in coffee year 2018/19 increased by an estimated 1.9% to 168.77 million bags, led by a 18.5% increase in Brazil’s production for the crop year ending March 2019. Global consumption in 2018/19 grew by an estimated 2.1% to 164.84 million bags. Although consumption growth outpaced production, the cumulative surplus over the last two seasons rose to 8 million bags.

The ICO composite indicator averaged 103.01 US cents/lb in July 2019, 3% higher than in June 2019. This marks the first time the average price reached over 100 US cents/lb since February 2019 when the price averaged 100.67 US cents/lb. The daily composite indicator arrived at its highest point, 107.87 US cents/lb, on 4 July, but slowly declined over the next few weeks. It reached 98.57 US cents/lb on 31 July. Concerns over frost that supported prices in late June and early July dissipated by the end of the month.

Average prices for the Arabica group indicators rose in July 2019. Prices for Brazilian Naturals experienced the largest increase, averaging 105.43 US cents/lb, 4.7% higher than in June 2019. Other Milds increased by 4.4% to 135.47 US cents/lb while Colombian Milds rose 3.1% to 137.63 US cents/lb. Given the larger increase in Other Milds prices, the differential between Colombian Milds and Other Milds fell by 42.6% to 2.16 US cents/lb. In contrast to the Arabica group indicator prices, Robusta prices decreased by 0.1% to 73.93 US cents/lb, which is 13.3% lower than the start of the coffee year.

In June, the arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets increased for the fourth consecutive month to 44.18 US cents/lb, 13.2% than in June 2019. Intra-day volatility of the ICO composite indicator price rose by 0.3 percentage points to 9.2% as the intra-day volatility of the Arabica group indicators rose. Amongst the Arabica group indicators, the intra-day volatility of Brazilian Naturals rose by 1 percentage point to 12%, of Other Milds by 0.7 percentage points to 9.7%, and of Colombian Milds by 0.2 percentage points to 8.7%. However, the intra-day volatility of Robusta declined to 6.9%, 1.7 percentage points lower than last month.

In June 2019, world coffee exports rose by 2.8% to 10.94 million bags compared to June 2018. This growth was led by shipments of Colombian Milds, which grew by 19.9% to 1.23 million bags. Exports of Brazilian Naturals grew by 8.8% to 2.91 million bags in June 2019 compared to the same month one year ago. Exports of Other Milds rose by 0.6% to 2.93 million bags. Robusta exports decreased by 4% to 3.86 million bags in June 2019.

Global exports in the first nine months of coffee year 2018/19 reached 97.28 million bags, an increase of 6.5% compared to the same period one year ago. Shipments of Brazilian Naturals rose by 20.6% to 31.12 million bags while Colombian Milds increased by 8.1% to 11.36 million bags. Robusta exports increased by 1.4% to 34.45 million bags in October 2018 to June 2019 while Other Milds fell by 3.3% to 20.35 million bags. The decrease in Other Milds is driven by India, Mexico, and Costa Rica where exports decreased by 9.2% to 4.69 million bags, by 11.8% to 2.11 million bags, and by 12.3% to 785,601 bags, respectively.

In coffee year 2018/19, world production is estimated at 168.77 million bags, with Arabica output, estimated at 103.79 million bags, accounting for 61% and Robusta, estimated at 64.98 million bags, representing 39% of the total. Output in the five largest producers this coffee year would account for 73% of world production.

Brazil’s production in crop year ending March 2019 increased by 18.5% to 62.5 million bags, which is reflected in the 20.6% increase in its exports this period, reaching 37.13 million bags. Brazil’s Robusta production has recovered from the previous drought as evidenced by the growth in green Robusta exports. After declining by 72% to 119,146 bags in the first six months of 2017, exports more than tripled to 505,912 bags in January to June 2018 and increased to 1.46 million bags in the first six months of 2019. Brazil’s exports of green Arabica in the first half of 2019 reached 15.86 million bags compared to 12.42 million bags last year.

Vietnam’s production is estimated 1.3% lower at 30 million bags as adverse weather conditions affected the yield in crop year 2018/19. Despite the reduction, output in 2018/19 would be the second largest volume on record for Vietnam following 2017/18.  Its exports in the first nine months of the year declined by 3.9% to 21.1 million bags.

Output from Colombia is estimated at 13.95 million bags in 2018/19, 1% higher than last year. According to the National Federation of Coffee Growers, production from October 2018 to June 2019 reached 10.34 million bags, 1.1% lower than the same period in 2017/18. However, exports from Colombia in the first nine months of coffee year 2018/19 amounted to 10.17 million bags, an increase of 7% from last year. Its shipments of soluble exports have grown steadily in recent years. In 2015/16, soluble exports represented around 5% of total exports, while in 2018/19 they represent around 6%.  Colombia’s imports in the first half of coffee year 2018/19 increased to 865,024 bags from 288,115 bags during the same period in 2017/18, with imports of green coffee accounting for 95.8% of total imports this year.

Indonesia’s production declined by 5.6% to 10.2 million bags in its crop year ending March 2019. Shipments during crop year 2018/19 declined by 33.7% to 5.15 million bags. In addition to the decline in output, steadily increasing consumption has reduced the availability of coffee for exports. Around 75% of Indonesia’s green coffee exports are shipments of green Robusta, which reached 2.06 million bags in the first nine months of the coffee year compared to 2.44 million bags last year. The share of soluble in the total exports has increased from 5.9% in 2010/11 to 20.7% in 2018/19. Total soluble shipments in the first nine months amounted to 749,372 bags.

Production in Ethiopia is estimated at 7.5 million bags, 0.6% higher than in crop year 2017/18. While Ethiopia is the world’s fifth largest producer, it is the ninth largest exporter given the high rate of domestic consumption. In 2018/19, Ethiopia’s consumption is estimated at 3.8 million bags, which represents 50.7% of its expected output. Exports in the first nine months of coffee year 2018/19 amounted to 2.47 million bags compared to 2.65 million bags in 2017/18.

The monthly average of the ICO composite indicator rose by 7.1% to 99.97 US cents/lb in June 2019, which is the first increase in the monthly average since January 2019. In May 2019, world coffee exports rose by 19.4% to 11.6 million bags compared to May 2018 while exports in the first eight months of coffee year 2018/19 rose by 7.5% to 86.57 million bags. Demand for coffee appears to be strong as imports by ICO importing Members and the United States, which account for around 75% of global imports, increased by 4.9% to 66.56 million bags in the first six months of coffee year 2018/19. Global coffee consumption is estimated to grow by 2% to 164.64 million bags in coffee year 2018/19. Despite the ongoing demand growth, a global production surplus of 3.11 million bags is expected in coffee year 2018/19. 

The ICO composite indicator averaged 99.97 US cents/lb in June 2019, 7.1% higher than in May 2019. This was the first increase in the monthly average since January 2019, when prices rose by 0.9% to 101.56 US cents/lb. The daily composite indicator ranged between 95.17 US cents/lb on 18 June and 105.25 US cents/lb on 28 June. The daily price rose above 100 US cents/lb for the first time since 18 February 2019 on 30 May and remained above that level on 9 out 20 days during the month of June.

Average prices for all group indicators rose in June 2019. Prices for Brazilian Naturals experienced the largest increase, averaging 100.69 US cents/lb, 9.5% higher than in May 2019. Robusta prices grew by 4.1% to 74.02 US cents/lb. Colombian Milds increased by 7.3% to 133.49 US cents/lb while Other Milds rose by 7.6% to 129.73 US cents/lb. As a result of these price movements, the differential between Colombian Milds and Other Milds in June 2019 fell by 2.3% to 3.76 US cents/lb, compared to May 2019, which follows three months of increase.

In June, the arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets, rose by 20.4% to 39.03 US cents/lb. Intra-day volatility of the ICO composite indicator price increased by 1.8 percentage points to 8.9% as the intra-day volatility of all group indicators rose. Amongst the Arabica group indicators, the intra-day volatility of Other Milds rose by 2.2 percentage points to 9%, of Brazilian Naturals by 2 percentage points to 11%, and of Colombian Milds by 1.9 percentage points to 8.5%. The intra-day volatility of Robusta increased to 8.6%, 1.3 percentage points higher than last month.

In May 2019, world coffee exports rose by 19.4% to 11.6 million bags compared to May 2018. This growth was led by shipments of Brazilian Naturals, which rose by 65.4% to 3.5 million bags. However, in May 2018, shipments were well below expectations due to a nationwide trucking strike that delayed delivery of coffee to ports. Brazil’s May exports averaged 2.73 million bags from 2013 to 2017. Robusta exports grew by 8.3% to 4.05 million bags in May 2019 compared to the same month one year ago. Significant growth in Robusta shipments from Brazil, where exports of green Robusta rose from 46,621 bags to 376,257 bags as well as increases in exports from Tanzania and Uganda offset the 5.1% decline in Vietnam’s green Robusta shipments. Exports of Colombian Milds grew by 6.1% to 1.15 million bags while Other Milds increased by 4.4% to 2.9 million bags.

Global exports in the first eight months of coffee year 2018/19 reached 86.57 million bags, an increase of 7.5% compared to the same period one year ago. Shipments of Brazilian Naturals rose by 21.9% to 28.22 million bags while Colombian Milds increased by 6.8% to 10.13 million bags. Robusta exports increased by 3% to 30.65 million bags in October 2018 to May 2019 while Other Milds fell by 3% to 17.57 million bags.

Imports by ICO importing Members and the United States, which on average account for around 75% of global imports, increased by 4.9% to 66.56 million bags in the first half of coffee year 2018/19. Imports by the EU in October 2018 to March 2019 rose by 3.5% to 42.71 million bags, and those of the United States increased by 8.1% to 14.98 million bags. Imports by Japan grew by 13.5% to 3.92 million bags, and the Russian Federation by 4.9% to 2.77 million bags. In contrast, Switzerland’s imports declined by 7.4% to 1.53 million bags in the first six months of coffee year 2018/19. Imports by Norway and Tunisia increased by 1.3% to 364,958 bags and 12.9% to 282,259 bags, respectively.  

Brazil was the largest source of coffee imports by the European Union, accounting for 20.9% of its imports in October 2018 to March 2019. This was followed by Viet Nam (15%), Colombia (3.8%), Peru (3.6%) and Honduras (3%). Imports from Brazil and Viet Nam increased by 12.5% to 8.92 million bags and by 5% to 6.41 million bags in the first half of coffee year 2018/19. However, imports from Colombia declined by 2.7% to 1.63 million bags and from Honduras by 4.8% to 1.3 million bags. Peru’s shipments to the European Union increased by 6.5% to 1.54 million bags.

Imports from Brazil and Colombia accounted for 52.4% of imports by the United States in the first six months of coffee year 2018/19. Viet Nam represented 10.2%, Mexico 5.7% and Peru 5.1% of US imports. Shipments from the five largest origins increased in October 2018 to March 2019 except from Viet Nam where they declined by 19.7% to 1.53 million bags. US imports from Brazil increased by 24.5% to 4.33 million bags and from Colombia by 11.4% to 3.52 million bags. Shipments from Mexico amounted to 855,799 bags, 6% higher than in October 2017 to March 2018, and from Peru rose by 20% to 767,411 bags.

Similar to the European Union and the United States, Brazil, Viet Nam and Colombia were the main origins for Japan’s imports in the first half of coffee year 2018/19, accounting for 38.6%, 20.4%, and 12.3%, respectively. Indonesia and Ethiopia, representing 7.2% and 6% of Japan’s imports, were the next two largest suppliers. Imports from Brazil rose by 36.4% to 1.52 million bags, from Ethiopia by 22.4% to 235,787 bags, and from Indonesia by 15.3% to 283,614 bags. However, imports from Colombia fell by 23.4% to 481,734 bags while imports from Viet Nam were almost unchanged, increasing by 0.6% to 800,568 bags.

Viet Nam and Brazil were the two main origins imported by the Russian Federation in October 2018 to February 2019, accounting for 30.8% and 20.9%, respectively. India represented 7.5% of total imports. However, Germany (9.6%) and Italy (6.1%) were important origins for imports by the Russian Federation. Nearly 50% of imports by the Russian Federation were of roasted (11.5%) or soluble (36.9%) coffee during this period. This is a much higher share of processed coffee than the other large importers where green coffee imports tend to account for around 90% of imports, except in the European Union where roasted coffee imports represented 20.1% of total imports.

Global coffee production is estimated at 167.75 million bags in coffee year 2018/19, compared to global consumption of 164.64 million bags. Although the increase in imports during the first six months of the coffee year indicates ongoing demand growth, it has not kept pace with the rise in global production in the last two years. As a results, there is a surplus of 3.11 million bags in coffee year 2018/19 following a surplus of 3.84 million bags in coffee year 2017/18. 

In April 2019, the ICO composite indicator fell by 3.2% to 94.42 US cents/lb, which is the lowest monthly average since July 2006 when the price reached 88.57 US cents/lb. Prices for all group indicators fell in April 2019. Low prices discouraged sales in March 2019, and world coffee exports amounted to 10.98 million bags, 3.8% lower than in March 2018. Shipments in the first half of coffee year 2018/19 increased by 4.1% to 63.15 million bags, reflecting the ample supply of coffee on the international market. Shipments of Brazilian Naturals rose by 18.4% to 21.7 million bags, and Colombian Milds grew by 8.6% to 7.95 million bags. Exports from Brazil in the first half of coffee year 2018/19, fuelled by significant growth in its harvest and encouraged by a depreciation in the exchange rate, increased by 26.5% to 21.29 million bags, driving the growth in global exports. Between April 2018 and March 2019, world exports rose by 4% to 124.72 million bags. The exports in this period coincide with the crop year for a number of countries, including Brazil and Indonesia, the world’s largest and fourth largest producers.

Coffee prices continued their downward trend as the monthly average of the ICO composite indicator fell to 94.42 US cents/lb in April 2019, 3.2% lower than in March 2019 and 16.1% lower than in April 2018. This represents the lowest monthly average composite indicator since July 2006 when it reached 88.57 US cents/lb. In April 2019, the daily composite indicator moved within a range of 91.79 US cents/lb and 97.25 US cents/lb. The fall to 91.79 US cents/lb on 17 April was the lowest daily price since 1 August 2006 when it was 88.77 US cents/lb. Market fundamentals are one of the main drivers of the current low prices as coffee year 2018/19 production exceeds consumption by 3.69 million bags. This is the second consecutive season of surplus with a cumulative total of 8.35 million bags.

Prices for all group indicators fell in April 2019, reaching monthly lows last seen 12 to 14 years ago. Colombian Milds observed the smallest month-on-month decline as it fell 0.6% to 124.42 US cents/lb. This is the lowest price for Colombian Milds since July 2007 when it amounted to 120.78 US cents/lb. Other Milds declined by 2.2% to 121.13 US cents/lb, and this level was last observed in December 2008 when it reached 118.97 US cents/lb. As a result of the movements, the differential between Colombian Milds over Other Milds increased by 145.5% to 3.29 US cents/lb, continuing the upward trend that started in March 2019. The price for Brazilian Naturals declined by 3.5% to 92.47 US cents/lb, and Robustas fell by 4.8% to 73.28 US cents/lb. Prices for Brazilian Naturals are at their lowest level since September 2005 when they amounted to 89.48 US cents/lb. However, the Robusta indicator price experienced a more recent low in May 2010 when it reached 70.70 US cents/lb.

In April, the arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets rose by 0.1% to 30.25 US cents/lb, following two months of decline. Intra-day volatility of the ICO composite indicator price increased by 0.5 percentage points to 6.2% as the intra-day volatility of Robusta and Brazilian Naturals increased by 1.5 and 0.2 percentage points, respectively. This offset the decline of 0.3 percentage points in the intra-day volatility of Colombian Milds.

In March 2019, world coffee exports amounted to 10.98 million bags, 3.8% lower than in March 2018 as low prices that month discouraged sales. Decreased shipments of Other Milds and Robusta offset growth in Colombian Milds and Brazilian Naturals. Compared to March 2018, exports of Brazilian Naturals increased by 9.7% to 3.11 million bags, and exports of Colombian Milds rose by 14% to 1.32 million bags in March 2019. In contrast, shipments of Robusta fell by 12.1% to 4.19 million bags, and exports of Other Milds decreased by 11.4% to 2.36 million bags.

Global exports in the first half of coffee year 2018/19 reached 63.15 million bags compared to 60.63 million bags in the first six months of 2017/18. For October 2018 to March 2019, shipments of Colombian Milds grew by 8.6% to 7.95 million bags as Colombia’s exports increased by 6.5% to 7.14 million bags during this period. Robusta exports in coffee year 2018/19 fell by 0.9% to 22.07 million bags, while shipments of Other Milds decreased by 10.2% to 11.43 million bags. Exports from the top three exporters of green Robusta fell in the first half of coffee year 2018/19. Shipments of green Robusta from Vietnam decreased by 5.9% to 11.89 million bags, from Uganda by 4.4% to 1.64 million bags and from India by 8.5% to 1.52 million bags. Other Milds exports observed a similar trend as shipments from Honduras, the largest exporter in the group, fell by 15.9% to 2.81 million bags. Exports from Peru and Guatemala, the next two largest shippers of this type, decreased by 1.4% to 2.1 million bags and by 9.4% to 1.1 million bags, respectively. For October 2018 to March 2019, exports of Brazilian Naturals rose by 18.4% to 21.7 million bags, as Brazil’s shipments of green Arabica increased by 22.8% to 18.19 million bags.

For the twelve months to March 2019, Brazilian Naturals, which increased by 12.5% to 38.11 million bags, also drove the growth in global exports for the period. In the same period, Colombian Milds rose by 5.5% to 14.6 million bags and Robusta increased by 2.8% to 45.21 million bags. However, Other Milds fell by 4.9% to 26.8 million bags. The exports in this period coincide with the crop year for a number of countries, including Brazil and Indonesia, the world’s largest and fourth largest producers. Peru, Papua New Guinea and Ecuador are also relevant producers with an April to March crop year. Harvesting of these producers’ 2019/20 crop is already underway with expectations of a fairly large off-year crop in Brazil given the generally favourable weather during the growing season. This is expected to keep the market well-supplied, reducing the possibility of a significant rally later in the year.

Between April 2018 to March 2019, Brazil’s total shipments amounted to 37.13 million bags, 20.6% higher than one year ago. This is also the third highest volume on record for shipments between April and March and represents around 60% of its production in crop year 2018/19. Brazil recorded a new record harvest in crop year March 2018 to April 2019 of 62.5 million bags, 18.5% higher than in 2017/18 and 10.1% higher than in 2016/17, the last on-year crop. The abundant harvest has supplied the market well in the last twelve months, as reflected in Brazil’s increased shipments. The increased volume of exports from Brazil has been encouraged by the depreciation of the Brazilian Real against the US dollar. As can be seen in figure 5, the Real weakened considerably between March 2018 and April 2019. This depreciation increases the return in local currency for Brazilian exporters selling coffee priced in dollars, thereby creating an incentive to release their stocks to the international market. Between April 2014 to February 2016, the Brazilian Real also weakened greatly, its value falling by 43.7% against the US dollar, while Brazil’s exports in crop years 2014/15 and 2015/16 were the two highest volumes on record.

While shipments from Indonesia rose by 37.3% to 475,318 million bags in March 2019 compared to March 2018, its shipments for April 2018 to March 2019 fell by 33.7% to 5.15 million bags. This is the lowest volume of shipments since April 2011 to March 2012. However, supplies were tight at the start of crop year 2018/19 due to the 6.4% decline in production in crop year 2017/18 to 10.8 million bags while exports rose by 12.6% to 7.76 million bags. The limited supplies, coupled with rising domestic demand, currently estimated 2.1% higher than last year at 4.8 million bags, have contributed to the decline in exports in the last 12 months.

Peru’s shipments fell by 2.7% to 3.92 million bags for the 12 months ending March 2019. The largest declines during this period occurred in the first two months of 2019. February 2019 shipments were 28.3% lower than shipments in February 2018. This trend continued in March 2019, where exports amounted to 54,015 bags, 28% lower than in March 2018, despite an increase in production of 2.8% to 4.4 million bags. In the face of unusually low prices in recent months, farmers and exporters may be holding onto coffee, particularly as Peru is at the end of its 2018/19 crop year when supplies are at their lowest.

Exports from Ecuador for the 12 months to March 2019 are 30.7% lower than a year ago, reaching 446,000 bags. Its shipments for April to March have declined in each year since 2012/13 when exports reached 1.58 million bags. Part of the decline is attributed to lower production, particularly after the coffee leaf rust outbreak in 2012/13.  However, Ecuador’s coffee sector has also concentrated on value addition through growth of its specialty coffee market as well as rising shipments of soluble coffee. While overall shipments from Ecuador declined steadily in the last six years, the share of its soluble shipments have increased from 71% in 2012/13 to 85% in 2018/19.

In contrast to Peru and Ecuador, exports from Papua New Guinea in April 2018 to March 2019 rose by 26.8% to 928, 369 bags. Papua New Guinea exports nearly all of its harvest, and primarily as green coffee, though it does ship small amounts of roasted coffee. The increased shipments in 2018/19 reflect the growth in its output, which is estimated at 950,000 bags, 29.4% higher than in crop year 2017/18.

In March 2019, the ICO composite indicator fell by 3.1% to 97.50 US cents/lb, which is the lowest monthly average since October 2006 when the price was 95.53 US cents/lb. Prices for all group indicators fell in March 2019, with Brazilian Naturals registering a decrease of 4.2% to 95.81 US cents/lb, the largest among the four group indicators. Shipments in the first five months of coffee year 2018/19 increased by 6.2% to 52.27 million bags, reflecting the ample supply of coffee on the international market. Shipments of Brazilian Naturals rose by 20.4% to 18.65 million bags, and Colombian Milds grew by 7.7% to 6.63 million bags. World production in coffee year 2018/19 is estimated at 168.05 million bags while consumption is estimated at 164.99 million bags, creating a surplus of 3.06 million bags. This follows a surplus of 4.16 million bags in coffee year 2017/18.

The monthly average of the ICO composite indicator fell by 3.1% to 97.50 US cents/lb in March 2019. This is the lowest monthly average since October 2006 when the price was 95.53 US cents/lb. The daily composite indicator generally declined over the month, starting at a high of 99.61 US cents/lb on 1 March 2019 and reaching a low of 96.23 US cents/lb on 22 March 2019. Prospects of a large off-year crop from Brazil for crop year 2019/20 and increased exports in each month of 2018/19 compared to the previous year are contributing to the sustained low prices this coffee year.

Price movements for all group indicators fell in March 2019. Prices for Brazilian Naturals decreased by 4.2% to 95.81 US cents/lb, which is the lowest price for this group since July 2006. Prices for Colombian Milds declined by 2.1% to 125.23 US cents/lb while Other Milds fell by 3.6% to 123.89 US cents/lb. In terms of differentials, Colombian Milds frequently traded above Other Milds in March, resulting in a differential of 1.34 US cents/lb for the month, reversing the trend of a negative differential last month. Prices for Robusta fell by 2.1% to 76.96 US cents/lb. In March, the arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets narrowed further, decreasing by 10% to 30.23 US cents/lb. The last time arbitrage had reached this level was in March 2003, with a difference of 30.84 US cent/lb between the New York and London futures prices. Intra-day volatility of the ICO composite indicator price decreased by 0.2 percentage points to 5.7% as the intra-day volatility of Robusta increased by 0.1 percentage point while it decreased for all Arabica indicators.    

In February 2019, world coffee exports amounted to 10.16 million bags, 3.2% higher than in February 2018. Increased shipments of Brazilian Naturals and Colombian Milds offset declines in Other Milds and Robusta. Compared to February 2018, exports of Brazilian Naturals grew by 27.7% to 3.46 million bags, and exports of Colombian Milds rose by 12.4% to 1.39 million bags in February 2019. In contrast, shipments of Robusta fell by 4.9% to 3.21 million bags, and shipments of Other Milds decreased by 16.8% to 2.11 million bags. In the first five months of 2018/19, total exports grew by 6.2% to 52.27 million bags. Exports of all types, except for Other Milds, increased compared to the first five months of 2017/18. Shipments of Brazilian Naturals rose by 20.4% to 18.65 million bags, and Colombian Milds grew by 7.7% to 6.63 million bags. Robusta exports in coffee year 2018/19 rose by 2.5% to 17.93 million bags. However, shipments of Other Milds fell by 10.1% to 9.05 million bags.  

World production in coffee year 2018/19 is estimated at 168.05 million bags compared to 165.54 million bags in 2017/18. The largest growth occurred in South America, where output increased by 4.4% to 80.42 million bags. Brazil’s 2018/19 crop year production has been revised upwards to 62.5 million bags since last month’s report. This in turn has caused global production to increase in both coffee year 2017/18 and 2018/19. Brazil’s exports in the first five months of the coffee year are 29.7% higher than one year ago, reaching 18.32 million bags. Shipments from Brazil have been supported by the weakness of the Brazilian real against the US dollar in the past few months. Colombia’s production is estimated to rise by 2.7% to 14.2 million bags in coffee year 2018/19. In February 2019, it exported 1.26 million bags of coffee, and its shipments in October 2018 to February 2019, grew by 6.1% to 6.01 million bags. 

Africa is estimated to harvest 17.74 million bags in 2018/19, an increase of 1.4% over 2017/18. The top three producing countries in Africa are all estimated to increase their output in 2018/19. Notably, Côte d’Ivoire’s production is estimated to rise by 9% to 1.6 million bags. This is reflected in the growth of their shipments in the first five months of coffee year 2018/19, which more than doubled to 617,241 bags compared to last year when they reached 243,155 bags.

Production in Central America & Mexico is estimated to decline by 0.5% to 21.72 million bags. Production in Honduras is estimated down 1.5% to 7.45 million bags following record production in 2017/18. Shipments from Honduras declined by 19.4% to 2.01 million bags, which largely accounts for the fall in Other Milds group’s exports this coffee year. Production in Mexico, the second largest producer in the region, is estimated to increase by 2.5% to 4.5 million bags, and output from Guatemala, the region’s third largest, is estimated to increase 1.1% to 3.9 million bags.

In Asia & Oceania output is estimated to decrease by 2% to 48.18 million bags. Vietnam’s production is estimated at 29.5 million bags, 3.4% lower than in 2017/18 due to lower than expected yields. Vietnam’s exports in February 2019 fell by 22.7% to 1.7 million bags compared to February 2018, but its shipments in the first five months of coffee year 2018/19 rose by 0.4% to 11.2 million bags. Output from Indonesia, the region’s second largest producer and the world’s fourth largest, is estimated to decrease by 5.6% to 10.2 million bags in crop year 2018/19. Its exports from April 2018 to February 2019 were 4.75 million bags, 36% lower than last year.

World consumption in coffee year 2018/19 is estimated at 164.99 million bags compared to 161.38 million bags in 2017/18. The largest growth occurred in Asia & Oceania where consumption increased by 4.4% to 36.9 million bags. Demand in Africa is estimated to rise by 2.5% to 11.17 million bags, and in North America by 2.2% to 30.61 million bags. Europe’s consumption is estimated to increase by 1.5% to 53.82 million bags, and South America’s consumption is estimated 1% higher at 27.24 million bags. However, demand in Central America & Mexico is expected to slow, with an increase of 0.2% to 5.27 million bags.  

In coffee year 2018/19, production is estimated to surpass consumption by 3.06 million bags, which is the second year of surplus. In 2017/18, there was a surplus of 4.16 million bags, following a deficit of 366,000 bags in coffee year 2016/17. This overhang of supply has greatly contributed to current low prices.