Coffee prices have fallen consistently over the course of 2013, with decreases recorded in nine out of the last twelve months. Although prices in December rose slightly compared to November, the ICO composite indicator is still at its second‐lowest level of the year, and 2013 recorded the lowest average annual price since 2009.
The ongoing deterioration of coffee prices steadied slightly in November, but the monthly averages of all the ICO indicator prices remain at multi‐year lows. The ICO composite indicator price averaged 100.99 US cents/lb, 5.6% lower than October and the lowest monthly level in six and a half years.
Coffee prices slipped further in September 2013, with the ICO composite indicator falling 4% to its lowest level since April 2009. The sharpest decline was observed in Robustas, which dropped by 6.6% to their lowest monthly average in nearly three years. At the end of coffee year 2012/13, total production is estimated at 145.2 million bags, 9.6% higher than the previous year. A decrease is estimated in the production of Other Milds, mostly due to damage from coffee leaf rust in Central America, although this has been more than compensated by increases in the other three coffee groups, especially Colombian Milds.
Coffee prices rallied slightly in July, supported by the possibility of frost in Brazil ‘s coffee-growing regions, before falling back down by the end of the month. The average of the ICO composite indicator increased by 1.2% compared to the previous month, but is still at its second-lowest level since September 2009.
Coffee prices fell sharply in June 2013, as market fundamentals, combined with an uncertain macroeconomic outlook, drove the ICO composite indicator price to its lowest level since September 2009. The market remains well supplied with coffee, with total exports for the first eight months of coffee year 2012/13 (October to May) reaching 75.7 million bags, compared with 72 million in the same period last year.
Coffee prices declined further in May 2013, causing the ICO composite indicator price to fall to its lowest monthly average since April 2010. All four group indicators decreased compared to the previous month, with the biggest percentage drop recorded in Robustas. This is reflected in the arbitrage between the New York and London futures markets, which widened for the second month in succession. The sustained drop in prices observed over the last two years has reduced the revenue earned by coffee producers, and consequently there is concern that many producers may be selling at a price which is not remunerative compared to the cost of production.