Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Coffee Settles Higher on Consumption Will Exceed Output Forecast

December 4, 2019 at 19:01 by Andrew Moran

Coffee futures are settling higher midweek after an industry report suggests that consumption will exceed output over the next year. With a global supply deficit expected, coffee prices, which have rallied all year, could remain entrenched above a buck per pound.

March coffee futures rose $0.0035, or 0.29%, to $1.216 per pound at 17:38 GMT on Wednesday on the US ICE Futures exchange. Coffee is already on track for a weekly gain of nearly 4%, adding to its year-to-date haul of roughly 20%.

According to the International Coffee Organization (ICO), coffee consumption will be greater than what farmers will be able to produce, leading to a deficit of approximately 502,000 bags in the 2019–2020 coffee year. In October, global exports tumbled 13.4% to 8.91 million bags from the same time a year ago.

Brazil’s smaller Arabica crop and the weather patterns affecting Central America and Asia are playing major factors in the state of the world’s favorite bean.

How will this impact prices?

Right now, using the ICO Composite Indicator, coffee prices have topped 100 cents per pound in November for the first time in 12 months. There is no reason to believe that prices will not remain at this level over the next year. But the study authors did take into account weakness in the Brazilian real, which has been the worst-performing emerging market currency this year.

In April, Rabobank had also forecast a global supply deficit of 2.3 million 60-kilogram bags in the 2019–2020 season. The report had listed lower production in several key production markets.

In other agricultural markets, January corn futures shed $0.0275, or 0.72%, to $3.7825 a pound. January wheat futures tacked on $0.015, or 0.45%, to $5.265 a bushel. February soybean futures added $0.0625, or 0.72%, to $8.7725 per bushel.

If you have any questions and comments on the commodities today, use the form below to reply.

Leave a Reply