Producers Struggle to Break Even as Coffee Prices Drop, ICO Says

Coffee prices continued their decline in May, causing the ICO composite indicator price to fall to its lowest monthly average since April 2010.

The London-based International Coffee Organization, which maintains the ICO composite indicator based on the New York and London futures markets, said in its monthly report for May the price for coffees is down nearly 20 percent from last year at this time. The biggest recent drop has been in robustas.

Global shipments of coffee have held steady since the beginning of 2012, from 8 to 10 million bags, but that revenue from those exports has declined by as much as 25 percent, from approximately $2 billion USD to $1.5 billion, the ICO said. The group expressed concern over the welfare of producers, who are taking the brunt of the market downturn.

“The sustained drop in prices observed over the last two years has reduced the revenue earned by coffee producers, and consequently there is concern that many producers may be selling at a price which is not remunerative compared to the cost of production,” the ICO stated.

Here’s more from the ICO on some specific indicators. For the full monthly report, click here.