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Coffee prices grow because of the future deficit

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Coffee prices grow because of the future deficit
December 05
09:00 2019

The International Coffee Organization reports that in November the coffee price rose to annual highs. 

The ICO also gives the forecast for the current agricultural year (it starts in October). So, the deficit will be 502 thousand bags (one bag contains 60 kg of grains). The world production will fall by 0.9%, global consumption will grow by 1.5%.

Last agricultural year brought 3.657 million bags of surplus. To track price dynamics, it is customary to use the ICO composite coffee indicator prices (this is an analogue of exchange indices that includes average coffee prices of different varieties from different countries). So, during a month this indicator has not fallen below one dollar per pound of flavored grains. The increase in the average daily price has amounted to 10.1%; at the moment the figure is 1.07 US dollars per pound.

October exports have sharply dropped. If we compare the figures with the previous year, the decrease has totaled 13.4%. It was September 2017 when the market observed such indicators for the last time. Bad weather and low prices in world markets are the reasons for the drop.

 In Latin America coffee prices have grown by a quarter in a couple of weeks because of the unfavorable weather conditions.


The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group

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