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Coffee prices reach highest average in 3.5 years due to anticipated production decline economic recovery from COVID-19

In April 2021, the International Coffee Organization (ICO) composite indicator rose by 1.4 per cent to 122.03 US cents per pound as prices for all group indicators increased. This marks a 12 per cent increase year-on-year as well as the highest monthly average in more than three and a half years.

Over the last six months, the ICO says coffee prices have recorded a steady increase in monthly averages despite a few daily slumps.

The ICO says market fundamentals are one of the main drivers of the current price trends as the imbalance between consumption and total production is getting smaller. Arabica supplies are expected to tighten in the near future, with Brazil’s production projected to decline by more than 30 per cent in its 2021/22 off-year crop. Moreover, various restrictions due to the ongoing pandemic affecting particularly the movement of population are expected to be gradually eased in the near future.

In April 2021, the daily composite indicator fluctuated between 114.22 and 130.87 US cents per pound.

Relatively firm prices seem to encourage sales as world coffee exports amounted to 11.9 million 60-kilogram bags in March 2021, 2.4 per cent higher than in March 2020.

Shipments in the first half of coffee year 2020/21 increased by 3.5 per cent to 65.4 million bags compared to 63.2 million bags recorded over the same period in coffee year 2019/20.

However, cumulative exports from April 2020 to March 2021 are provisionally estimated at 129.5 million bags, a 1 per cent decrease compared with the 130.8 million bags recorded from April 2019 to March 2020.

World consumption for coffee year 2020/21 is projected at 166.3 million bags, an increase of 1.3 per cent on its level of 164.2 million bags in coffee year 2019/20.

The ICO has revised its production estimate for the current coffee year downwards, owing to Brazil’s smaller 2021/22 Arabica crop.

Despite this, world consumption is forecast to remain at 2 per cent below total production of 169.6 million bags in coffee year 2020/21.

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