Prices for Arabica coffee in July 2021 surged to the highest levels
since November 2014 as severe frost hit Brazilian coffee farms,
while concerns grow over weather phenomena in other producing
countries
Coffee prices continued to increase in July 2021, with the Arabica variety reaching its highest levels since
November 2014, as concerns grew about the current and future availability of many origins, especially the
world’s largest producer, Brazil, which suffered a severe frost on July 20. As a result, market volatility
increased. 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.
In terms of market fundamentals, exports of all forms of coffee by all exporting countries to all
destinations totalled 11.2 million 60-kg bags in June 2021, an increase of 4.1% compared with
10.8 million bags in June 2020. The level of total exports in June 2021 mirrored the volume of
11.2 million bags recorded in June 2019, before the pandemic. Social unrest affecting transportation
logistics in some origins, particularly Colombia, has ended. Moreover, with the gradual introduction of
vaccination programs, covid-19 pandemic-related restriction measures affecting people’s movement
have been eased in many exporting countries. Total exports of all forms of coffee over the first nine
months of coffee year 2020/21 amounted to 98.6 million bags, an increase of 2.5% compared with
96.1 million bags during the same period in coffee year 2019/20. Cumulative exports from July 2020
to June 2021 are estimated at 129.7 million bags, an increase of 0.6% compared with the 129 million
bags recorded from July 2019 to June 2020. World consumption for coffee year 2020/21 is projected
at 167.58 million bags, an increase of 1.9% on its level of 164.43 million bags in coffee year 2019/20.
The projection for total production in coffee year 2020/21 remains unchanged at 169.50 million bags,
2 Coffee Market Report – July 2021
representing a 0.3% increase on 168.94 million bags harvested in coffee year 2019/20. However, with
substantial reduction of output from Brazil and many other origins affected by climate-related shocks,
combined with increasing demand, the supply/demand ratio is expected to reverse from coffee year
2021/22 onward.
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