Global coffee prices on the commodities markets fell for the second month straight, amplifying economic uncertainty for coffee producers as the current coffee price crisis lingers into its third year.
According to the International Coffee Organization‘s monthly trade report, the ICO composite indicator price decreased by 4.1% to an average of $1.0445 USD per pound in May, reaching a high of $1.0729 on May 11, and a low of $0.9868 on May 29.
The ICO attributed the price decrease to expectations of a larger output from Brazil’s 2020/21 crop, which is on the high side of its biennial cycle, and uncertain expectations on demand, in part due to COVID-19.
The decreased price indicator comes despite the fact that global coffee shipments for the first seven months of the coffee year, from October 2019 through April 2020, decreased by 3.8% from the year prior to 72.78 million bags.
In that same seven-month period compared to the 2018/19 year, exports from Africa increased by 7% to 7.66 million bags, exports from Asia and Oceania increased by 0.6% to 23.62 million bags, while exports from Central America and Mexico decreased by 4.9% to 8.77 million bags and exports from South America decreased by 8.6% to 32.74 million bags, according to the ICO’s statistics.
As for how the novel coronavirus pandemic may be affecting the global coffee market, the ICO now estimates that global consumption in 2019/20 is estimated to be 0.5% higher than the previous year, despite what has been a dramatic drop in out-of-home coffee consumption all over the world as social-distancing measures took effect. Said the ICO, “Additionally, job losses could lower demand, particularly for non-habitual consumers.”
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