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ICO Coffee Report shows price increase in May

The Coffee Market Report from the International Coffee Organization (ICO) shows a price increase for all coffee groups in May 2018.

The largest increase occurred in the average price for Other Milds, which grew by 0.9 per cent to 135.61 US cents per pound while Colombian Milds increased by 0.7 per cent to 140.26 US cents per pound. As a result, the differential between Colombia Milds and Other Milds decreased by 6.1 per cent to an average of 4.65 US cents per pound.

Brazilian Naturals increased by 0.7 per cent to 119.57 US cents per pound in May 2018, which is the lowest average for May since 2009. The monthly average Robusta price increased by 0.5 per cent to 88.74 US cents per pound, which is above the averages for the same month in six of the last 10 years.


The ICO composite indicator increased in May by 0.7 per cent to an average of 113.34 US cents per pound following three months of declines.

Global coffee exports amounted to 10.18 million bags in April 2018, compared with 9.50 million in April 2017, driven by an increase of 14.1 per cent for Robusta shipments and 6.8 per cent for Colombian Milds.

World production in 2017/18 is estimated 1.2 per cent higher than last year at 159.66 million bags with output expected to grow in eight of the 10 largest coffee-producing countries. Output is expected to rise from Africa, Asia and Oceania, Mexico and Central America.

Arabica output is expected to decline by 4.6 per cent to 97.43 million bags while Robusta production is predicted to grow by 12.1 per cent to 62.24 million bags.

The daily composite indicator started the month at 116.88 US cents per month, decreasing to 110.61 US cents per pound by the end of the month at 114.90 US cents per pound. While the monthly average is slightly higher than last month, it is the lowest average monthly price for May since 2007 when the ICO composite indicator reached 100.09 US cents per pound.

Despite the relative balance between supply and demand in the coffee market for coffee year 2017/18, the large crop anticipated in the coming months seems to be factored into current market prices, which are lower than the fundamentals would suggest.

The average arbitrage in May, as measured on the New York and London futures markets, rose by 4.5 per cent to 42.65 US cents per pound.

Additionally, intra-day volatility of the ICO composite indicator price increased to 4.8 pent.

Total exports in April 2018 grew by 7.1 per cent to 10.18 million bags compared to April 2017.

Robusta exports saw an increase of 14.1 per cent, while shipments of Colombian Milds grew by 6.8 per cent. Total exports for October 2017 through April 2018 were 1.2 per cent higher than those for the same period one year ago.

Exports of Brazilian Naturals reached 20.83 million bags, which is 1 per cent lower than in October 2016 to April 2017.

However, Other Milds and Robusta exports increased in the first seven months of coffee year 2017/18 by 6.8 per cent and 3.6 per cent respectively.

Brazil, the world’s largest producer and exporter of coffee, increased its shipments of coffee by 4 per cent in April 2018 compared to April 2017. However, its exports in the first seven months of coffee year 2017/18 are 5.7 per cent lower than one year ago, as it was an off-year of the biennial production cycle for Arabica. This is attributed to a smaller total crop in 2017/18, estimated 7.3 per cent lower than 2016/17 at 51 million bags.

Increasing domestic consumption may also be contributing to the lower export volumes. However, harvesting of its 2018/19 crop is underway with a larger crop expected given that Arabica production will be in an on-year and weather has generally been beneficial.

In terms of volume, increased shipments from Vietnam for October to April more than cover the shortfall in Brazil’s shipments during the same period. In the first seven months of coffee year 2017/18, Vietnam’s exports are estimated 17.3 per cent higher at 17 million bags compared to one year ago, and are the highest volume ever recorded for the period.

Colombia’s exports in April 2018 increased 3 per cent to 0.9 million bags compared to the same month one year ago, and its total shipments in the first seven months of coffee year 2017/18 declined by 9.2 per cent to 7.62 million bags.

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