Monthly C-Market Report: Coffee Prices Hit Lowest Point in Five Months

Despite uncertainty still surrounding the Brazilian crop currently being harvested, the average price of commodity coffees throughout the world dropped to its lowest level in five months, according to the latest statistics from the London-based International Coffee Organization.

The group’s ICO composite indicator price — which reflects the trading of Colombian Milds, Other Milds, Brazilian Naturals and Robusta — dropped 7.3 percent from May to $1.51 U.S. dollars per pound in June. In good news, the price volatility among all the commodity coffee categories throughout June decreased, improving on what the ICO described as unprecedented volatility in the month of May. Additionally, the composite price began to rebound toward the end of June, suggesting an upward trend for July.

(related: South Korean Coffee Imports from U.S. Roasters Increase in 2013/14)

Graph by the International Coffee Organization.

The ICO has also updated its production forecast for the 2013/14 year to 145.2 million bags, which it describes as “virtually unchanged” from 2012/13, despite a higher demand forecast — a factor that could signal higher commodity prices as the year progresses. The group says Colombian production is making up for shortfalls expected in Central America due to La Roya and in Brazil due to unfavorable weather this Spring.

(related: 2014/15 Global Coffee Production Estimates: A Region-by-Region Breakdown)

Total  Arabica  production  is estimated at 85.3 million bags, down 4% on 2012/13, as  the  damage  from  coffee  leaf  rust  in  Central America  had  a severe  impact  on  production,  with around  4  million  bags  lost  compared  to 2011/12 (before the outbreak). Production in Colombia has been  revised  slightly  higher  to  11  million bags, based on monthly production levels, which for the first nine months of crop year 2013/14 have already reached  8.8  million  bags,  21.5%  higher  than  the same period in 2012/13.

Production of Robusta, meanwhile,  is expected to jump 6 percent to 59 million bags over last year, in large part due to increased growing in Vietnam.

Click here for the ICO’s full June market report.