The average of the International Coffee Organization (ICO) composite indicator in August rose by 10.7 per cent to 114.78 US cents per pound.
This is an increase of 19.5 per cent compared to August 2019 when the ICO composite indicator averaged 96.07 US cents/lb, the lowest average for August since 2006.
While prices have increased, they remain low compared to the long-term average of 139.21 US cents per pound in the previous ten years.
The daily composite indicator continued the upward trend at the end of July starting the month at 113.62 US cents per pound before reaching a low of 109.90 US cents per pound on 11 August. However, prices recovered over the rest of the month and reached a high of 121.31 US cents per pound on 31 August.
The ICO says concerns over temporary tightness in supply, as evidenced by the lower output and exports in some countries, particularly producers of Mild Arabica, supported firm prices in August.
All group indicator prices rose in August 2020 for the second consecutive month with the largest increase occurring for Brazilian Naturals.
In July 2020, world coffee exports fell by 11 per cent to 10.61 million bags compared to July 2019, and Other Milds recorded the largest decrease.
In the first ten months of coffee year 2019/20, global exports reached 106.59 million bags, 5.3 per cent lower than the same period in 2018/19.
World coffee production is estimated at 169.34 million bags in 2019/20, 2.2 per cent lower than last year. The ICO projects production to decrease in four of the five largest producers in Central America and Mexico. Output from Brazil, both the world’s and South America’s largest producer, fell by 10.9 per cent to 58 million bags in crop year 2019/20, which ended March 2020.
Production is expected to rise in Africa’s two largest producers, Ethiopia and Uganda. Ethiopia’s harvest is estimated to increase by 2.1 per cent to 7.7 million bags due to beneficial weather and improved agricultural extension services. Output from Uganda is estimated at 4.9 million bags, 4.2 per cent higher than last year, which is the second year of increase. Favourable weather and new trees reaching maturity have boosted yields in Uganda.
Meanwhile, global consumption is estimated to rise by 0.3 per cent to 168.39 million bags in 2019/20. As a result, there is an estimated surplus of 952,000 bags.