December 21, 2016

Prices Falling, Supplies Increasing: The State of The C Market


Coffee prices have been falling at a worrying pace, but in November it looked like a dramatic reversal was on the cards. That was until the ICO published their most recent report.

Once again, coffee prices have been falling. In November, they nearly hit $1.50/lb. Today the composite price sits at $1.3261/lb.

SEE ALSO: Mayra Orellana-Powell and Lowell Powell on Low Coffee Prices

graph of coffee prices for December

Greater Yields, Lower Prices

There are multiple reasons for this decline, the ICO explains. One is the depreciation of the Brazilian real. However, it can also be linked to higher than anticipated yields. Colombia, in particular, experienced a strong start to the crop year, as did Peru.

SEE ALSO: An Unstable Market: The Economics of Global Coffee Prices

Colombian coffee production plummeted between 2009 and 2012 due to coffee leaf rust (la roya), but by 2014 production reached the same rate as in 2007 (according to the Financial Times). The fact that production is currently higher than in 2014 is promising for those of us who want our cup of coffee – but may cause more concern for producers.

However, there are still many factors that could influence Colombia’s overall annual yield – after all, 2015/6 also started with a higher production rate before falling in June to August. The ICO also notes that an early  La Niña could also decrease yields.

And although some coffee production is on the increase, Robusta exports were down by 12.9%.

Feature photo credit: ICO

Perfect Daily Grind

Want to read more articles like this? Sign up to our newsletter!