ICO market report: increased production leads to surplus
The September 2018 coffee report from the International Coffee Organization (ICO) estimates that world coffee production in coffee year 2017/18 (1 October 2017 to 30 September 2018) is 5.7 per cent higher than the previous year at 164.81 million bags.
Arabica production has increased by 2.2 per cent to 101.82 bags, and Robusta grew 11.7 per cent to 62.99 million bags.
In coffee year 2017/18, world coffee consumption is estimated to be 1.8 per cent higher than 2016/17 at 162.23 million bags, but coffee production exceeded this by 2.58 million.
The ICO attributes low prices this season to this surplus.
The larger supply in coffee year 2017/18 is reflected in increased shipments in August 2018, as global exports increased 6.3 per cent to 11.1 million bags compared to August 2017.
The ICO composite indicator fell to 98.17 US cents per pound in September 2018. This is 4.1 per cent lower than in August 2018, and the lowest monthly average since October 2006 when it reached 95.53 US cents per pound.
The daily composite indicator remained below 100 US cents per pound until 28 September when it reached 100.83 US cents per pound. On 18 September, the daily composite price reached 95.87, the lowest value of the month.
Prices for all group indicators fell for the fourth consecutive month in September 2018. The largest decrease occurred in the average price for Robusta, which fell by five per cent to 76.70 US cents per pound followed by a decline of 4.4 per cent to 99.87 US cents per pound for Brazilian Naturals.