Global Coffee prices fall on strong exports

Mazino Dickson, Abuja

Coffee prices have continued to fall as the market remains well supplied and inventories in consuming countries are high as a result of strong exports in the first seven months of the coffee year.

These were the latest figures for the global coffee market released by International Coffee Organization (ICO) for the month of May, 2017.

For the first time in three years, Colombian Milds traded above Other Milds. Finally, Conab have released their second estimate of production in Brazil for 2017/18, which they forecast is to decrease by 11.3% to 45.56 million bags compared to crop year 2016/17.

Coffee prices have been falling since February as a consequence of the easing of weather‐related supply concerns, as well as the more general downturn in commodity markets.

Notably, for the first time in three years Colombian Milds were traded 1.41 US cents/lb, i.e. above the Other Milds indicator.

This is the preliminary end point of a long process of convergence which had been ongoing since March 2016, when the differential between the two groups peaked at ‐12.30 US cents/lb.

During the first five months of 2017 in particular, the price of Other Milds decreased at a higher rate than the price of Colombian Milds.

While Colombia was successfully increasing its output through replanting programmes, producers of Other Mildssuch as Costa Rica, El Salvador, Honduras, Guatemala, Mexico, Nicaragua and Peru were, in 2012/13, negatively affected by the outbreak of coffee leaf rust.

This led to lower supplies of Other Milds, resulting in higher prices. Since then, production in various Other Milds origins has recovered most notably Honduras and Peru.

The export volume of Other Milds in the period May 2016 to April 2017 grew by 9.4% compared to the previous year while the previously strong growth in exports of Colombian Milds levelled off.

However, reports from Honduras indicate the possibility of a new coffee leaf rust outbreak.