The price of raw coffee beans plummeted. Latin American coffee industry is in crisis. Farmers give up planting.

Professional coffee knowledge exchange more coffee bean information please follow the coffee workshop (Wechat official account cafe_style)

The price of international coffee beans has fallen to a 13-year low, prompting many disappointed farmers in Central and South American countries to give up cultivation, raising fears that the coffee industry will fall into crisis. Experts pointed out that the outlook for coffee bean prices will depend on the exchange rate trend of Brazil's Lille.

Although the July futures price of Arabica coffee beans on the New York Intercontinental Exchange (ICE) rebounded 3.6% to 92.90 cents per pound on the 19th, it is still near a 13-and-a-half-year low. The futures fell to 89 cents per pound last week, the lowest price since September 2005.

However, the production costs of many coffee farms in Central America range from $1.2 to $1.50 per pound, leaving most coffee producers feeling helpless.

The main reason for the weak price of coffee beans is the increase in Brazilian supply (about 25% of the world's total). According to Brazilian government data, total production reached an all-time high of 62 million bags (60 kg each) in 2018, coupled with the devaluation of Brazil's Lille, prompting Brazilian coffee suppliers and exporters to expand exports, leading to further weakness in dollar-denominated international coffee prices. Brokers pointed out that Brazilian companies accelerated their exports in the first quarter of this year, with exports surging by 500000 bags in February compared with the same period last year.

The Brazilian government expects coffee production in Brazil to be 15% lower this year than last year, a reduction of about 55 million to 60 million bags.

Coffee bean production in Brazil often changes on a two-year cycle; for example, it increased last year and will decrease this year, allowing coffee trees to recover. However, according to Brazilian agricultural agency estimates, even if the output is reduced to 52.5 million bags this year, it is still the highest level of "yield reduction year" and higher than the previous "year of increasing production", except in 2018.

British broker Marex pointed out that the severe downturn is driving some marginal producers out of the market, which will hit the output of all Central American countries in the 2019 and beyond production season. The key factor affecting the coffee market is still the Lille exchange rate, and the future trend of the Lille depends on whether the Brazilian government's annuity reform bill can pass, and whether the fiscal revenue and expenditure can be improved.

Mela, an analyst at Rabobank, pointed out that "the outlook for the coffee market depends on the trend of Lille and the competitiveness of Brazilian coffee growers." The collapse in coffee prices has prompted farmers in Guatemala to abandon their farms, while Colombian farmers have switched to cocoa beans.

Important Notice :

前街咖啡 FrontStreet Coffee has moved to new addredd:

FrontStreet Coffee Address: 315,Donghua East Road,GuangZhou

Tel:020 38364473