The coffee sector keeps evolving and we like keeping an eye on how things are going
We at ArtOn Café always follow the coffee sector and everything that is connected with it. We are interested in coffee prices – and in fact we have just published an excerpt of the ICO Coffee Market Report of July – but also in weather conditions and climate change (make sure you read our article about the situation in Brazil, the one about the effects of climate change on Colombia and also the one about carbon neutrality). Let’s now check how things are going generally.
What’s the weather like?
Brazil was severely hit by the frost season, which affected the coffee plantations and therefore the coffee prices. However, the climatological frost risk-period in Brazil usually ends at the end of August. This year the cold season was particularly extreme and it will probably be remembered for a long time by all actors involved in the coffee industry (Oddo, 2021).
On the other hand, the rainy season is about to start and it will be of great importance for the coffee crop of 2022/23. For the time being, Brazil still has some weeks before the beginning of the rainy season and the rains that will start the main flowering and fixation period (Oddo, 2021).
Furthermore, it should be underlined that we are at the beginning of the Atlantic hurricane season (Oddo, 2021), which might also have a huge effect on coffee plantations.
How much is it?
In July 2021 coffee prices continued to increase, and Arabica coffee reached its highest levels since November 2014. Moreover, Brazil’s severe frost affected the coffee market, which increased significantly.
“The monthly average of the ICO composite indicator reached 152.24 US cents/lb in July 2021, its highest level since 162.17 US cents/lb recorded in November 2014. Compared with the monthly average in October 2020, the beginning of the current coffee year, the level reached in July 2021 represents an increase of 43.8%. Prices of all four groups of coffee have recorded substantial increases. This upward trend of coffee prices over the first 10 months of coffee year 2020/21 seems to confirm a net recovery from the low-price levels that have dominated the world market since coffee year 2017/18. The price performance has also been driven by brighter prospects for demand, as pandemic-related restriction measures are being removed in major consuming markets and the development of vaccination programmes is enabling a progressive return to normal economic activity” (ICO, 2021b).
Visit ICO’s website and read more about their coffee market report of July.
The following is an excerpt of the market report published by Sucafina:
10th August 2021
This week, coffee prices consolidated around 175 cents/lb, falling 3.55 cents from Friday to Friday to close at 176 basis the September contract. As most of Europe heads into peak vacation season, the coffee market is starting to see an extreme amount of sluggishness given the craziness of the last month of Brazil frosts. With the weather stabilized at the moment, the next major point of concern will be the return of rains in Brazil, which typically arrive in September.
A pause in Brazil allows us to explore issues in other origins, such as Honduras, the second largest washed Arabica producer after Colombia. Honduras’s upcoming crop has been hampered by 2 hurricanes and an excessively rainy season. As a result, the outlook for the coming crop has shifted from positive to negative. This further affects an already tight supply and demand situation for Arabica coffee in the next year. Therefore, quiet periods like this are likely to become somewhat abnormal in the coming months, and our expectation is for volatility and prices to continue to increase (Byzov, 2021).
Coffee plantation in Brazil
Trade statistics of June 2021
The following statistics are based on ICO’s data (ICO, 2021b):
- World coffee exports: 11.20 million bags in June 2021, compared with 10.76 million in June 2020
- Exports in the first 9 months of coffee year 2020/21 (Oct/20 to June/21) have increased by 2.5% to 98.55 million bags compared to 96.15 million bags in the same period in 2019/20
- In the twelve months ending June 2021, exports of Arabica totalled 82.80 million bags compared to 79.58 million bags last year; whereas Robusta exports amounted to 46.93 million bags compared to 49.43 million bags.
Check facts and figures on the global coffee trade on ICO’s website
Sucafina publishes weekly origin reports, which help us to follow global and local changes and variations.
Read with us Sucafina’s Origin report published on the 9th of August 2021 (Sucafina, 2021).
The world of coffee is constantly evolving and reacting to the pandemic that has severely affected the entire coffee industry.
New events concerning coffee are on our bucket list for the next few weeks. One of these is the Caffè Culture Show, which is taking place on the 2nd and 3rd of September at the Business Design Centre in London.
The show attracts trade industry professionals and represents a great opportunity for exhibitors to expand their business and for visitors to meet hundreds of suppliers and to see innovative new products (Caffè Culture Show, 2021).
At this year’s event, DRWakefield is sponsoring the Roaster’s Forum, with a jam-packed day of talks, panel discussions and tastings on Thursday the 2nd of September (DRWakefield, 2021).
Are you ready for this exciting trade show that is catching us at the end of the month?
Byzov, I. (2021). Market Report. Retrieved from https://sucafina.com/emea/lp/market-report?utm_source=Sucafina+Specialty&utm_campaign=dce88326ee-EMAIL_CAMPAIGN_2021_08_04_01_58&utm_medium=email&utm_term=0_a8eea20eeb-dce88326ee-385061254
Caffè Culture Show. (2021). Welcome to Caffè Culture Show. Retrieved August 12, 2021, from https://www.caffecultureshow.com/
DRWakefield. (2021). Caffè Culture Show 2021. Retrieved August 12, 2021, from https://drwakefield.com/news-and-views/caffe-culture-show-2021/?utm_source=Newsletter+Mailing+List+May+2018&utm_campaign=0c0c2eafeb-EMAIL_CAMPAIGN_2020_01_22_10_01_COPY_01&utm_medium=email&utm_term=0_d2aa19fb26-0c0c2eafeb-434305845
ICO. (2021a). ICO Indicator Prices. Retrieved from https://ico.org/prices/pr-prices.pdf
ICO. (2021b). What’s New – Prices for Arabica coffee in July 2021 surged to the highest levels since November 2014 as … Retrieved August 12, 2021, from https://ico.org/
Oddo, G. (2021). Weather Report with Greg Oddo. Retrieved from https://sucafina.com/emea/lp/weather-report?utm_source=Sucafina+Specialty&utm_campaign=dce88326ee-EMAIL_CAMPAIGN_2021_08_04_01_58&utm_medium=email&utm_term=0_a8eea20eeb-dce88326ee-385061254
Sucafina. (2021). Origin Report – Week 31. Retrieved from https://assets-eu-01.kc-usercontent.com/4192440f-b944-0135-c768-e05d36ed3e93/57bc2dce-6d83-49ec-8ce5-e0c212dcf2fb/Orign Report Week 31.pdf
Picture credits: if not otherwise specified, the pictures were purchased by the ArtOn Café director.