In May 2021, the International Coffee Organization (ICO) composite indicator of coffee prices rose by 10.4 per cent to 134.78 US cents per pound, the highest monthly average since the level of 137.68 US Cents per pound registered in February 2017.
The level reached in May 2021 is 29 per cent higher than May 2020 and represents the seventh consecutive month of increase.
The ICO composite indicator increased consistently over the course of the month, starting at 127.21 US cents per pound and finishing on a high of 144.43 US cents per pound, an increase of 13.5 per cent.
The ICO says a firm upward trend of coffee prices over the first eight months of coffee year 2020/21 seems to confirm a net recovery from the low price levels that began in coffee year 2017/18.
The price performance has been driven by an expected reduction in production in key exporting countries like Brazil for the 2021/22 season. Moreover, the brighter prospects for demand as the COVID-19 pandemic-related lockdown measures are being removed in major consuming markets with the COVID-19 vaccine programs is generating greater confidence of consumers in an economic recovery and return to normal.
Prices of all four groups of coffee have recorded a substantial increase, particularly the groups of Arabica coffee. In terms of market fundamentals, shipments by exporting countries to all destinations totalled 11.4 million 60-kilogram bags in April 2021, compared with 11.29 million bags in April 2020.
As a result, total exports over the first seven months of coffee year 2020/21 amounted to 77.52 million bags compared to 74.49 million bags over the same period in coffee year 2019/20.
Cumulative exports from May 2020 to April 2021 are estimated at 130.40 million bags, a small decrease of 0.48 per cent compared with the 130.97 million bags recorded from May 2019 to April 2020.
World consumption for coffee year 2020/21 is projected at 167.58 million bags, an increase of 1.9 per cent on its level of 164.43 million bags in coffee year 2019/20.
Total production for coffee year 2020/21 is estimated at 169.60 million bags, representing a 0.4 per cent increase on 168.94 million bags in coffee year 2019/20.
Although world consumption is increasing, it remains 1.2 per cent below world production. However, with prospects of lower production in Brazil for coffee year 2021/22 and the reductions in other countries, the ICO says world consumption is likely to exceed world production in coffee year 2021/22.