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ICO EXPECTS 2018/19 TO BE THE SECOND YEAR OF SURPLUS

ICO EXPECTS 2018/19 TO BE THE SECOND YEAR OF SURPLUS



As highlighted in the January 2019 issue of C&CI, after a small surplus in the global coffee market in 2017/2018, a surplus is also expected in 2018/2019, primarily as a result of a large crop in Brazil.

In its latest report on the market, the International Coffee Organization said it expected coffee year 2018/19 to be the second consecutive season of surplus, as global output, estimated at 167.47 million bags, exceeds world consumption, estimated at 165.18 million bags.

However, given stronger growth in demand, the surplus for 2018/19 is projected to be 2.29 million bags, around 1 million bags less than in 2017/18.

This excess in supply continues to put downward pressure on prices that will likely continue over the next few months. After a decline of 1.5 per cent to 109.59 US cents/lb in November 2018, the monthly average of the ICO composite indicator fell sharply to 100.61 US cents/lb in December 2018.

Prices for all group indicators declined in December 2018, with the largest decreases for Brazilian Naturals and Colombian Milds, which fell by 9.9 per cent to 102.10 US cents/lb and by 8.2 per cent to 127.86 US cents/lb, respectively. Other Milds decreased by 7.3 per cent to 127.10 US cents/lb, reducing the differential with Colombian Milds to just 0.76 US cents/lb in December 2018. Robusta fell by 7.1 per cent to 77.57 US cents/lb.

The monthly average of the ICO composite indicator fell by 8.2 per cent to 100.61 US cents/lb in December 2018. The daily composite indicator started at a high of 104.59 US cents/lb and fell to a low of 97.59 US cents/lb on 18 December. After the first week, the daily composite indicator hovered around 100 US cents/lb with a range of around 4 US cents/lb. Coffee year 2018/19 is expected to be in surplus, though smaller than the one in 2017/18, which continues to put pressure on prices.

The ICO said prices for all group indicators fell sharply in December 2018 compared to the previous month. The largest decreases occurred in the average price for Brazilian Naturals and Colombian Milds, which fell by 9.9 per cent to 102.10 US cents/lb and by 8.2 per cent to 127.86 US cents/lb, respectively. Other Milds decreased by 7.3 per cent to 127.10 US cents/lb, while Robusta fell by 7.1 per cent to 77.57 US cents/lb.

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