ICO released its May coffee report saying that coffee production in 2023/24 will increase to 178 million bags!

Recently, the international coffee organization ICO released its monthly report on the global coffee market in May, which showed that the average price of the composite index was 208.38 cents per pound, down 3.9 percent from the previous month.

In May, composite indicator prices fluctuated between 195.13 cents and 230.61 cents. At the end of April, Vietnam, the world's second-largest coffee producer, experienced a widespread drought that farmers feared would cause irreparable damage to coffee plants and push up prices.

But in early May, Vietnam began to rain, easing farmers' fears of a widespread drought. In addition, Brazil reported relatively dry weather and limited rainfall, which enabled coffee harvesting to proceed smoothly, so target prices began to fall.

But by mid-May, target prices began to rise due to uncertainty in the supply of coffee crops in Brazil and Vietnam, two big coffee countries, and in Central America due to dry weather and above-average temperatures. Another factor is that the devaluation of the Brazilian real in May continued to put pressure on coffee prices.

On the other hand, coffee stocks on the ICE exchange in the United States and the ICEU exchange in Europe increased significantly, with the coffee stock on the ICE exchange in the United States rising sharply by 30.3% to 840000 bags, while the coffee stock in the ICEU exchange in Europe increased by 24.9% to 780000 bags.

The increase in inventories was mainly due to an increase in global exports of raw coffee beans, which totaled 10.77 million bags in April, an increase of 15.3 per cent over the same period last year.

Of this total, South America increased by 44.5 percent to 5.15 million bags, mainly due to strong growth in Brazil. Brazil exported 4.24 million bags of coffee, an increase of 54.8 percent over the same period last year, the largest since records began in April.

Coffee exports from Africa also increased by 39.4 per cent to 1.37 million bags, mainly from C ô te d'Ivoire and Ethiopia in April. Compared with the same period last year, C ô te d'Ivoire increased by 202.5 per cent and Ethiopia by 103.6 per cent.

But at the same time, coffee exports in Asia and Oceania fell 0.3 per cent compared with the same period last year to 3.78 million bags due to production cuts in both Vietnam and Indonesia.

In addition, the decline in exports was also seen in Mexico and the Central American region, where exports fell 12.6 per cent to 1.66 million bags, mainly in Guatemala, Honduras and Nicaragua, which fell sharply in April, by 12.6 per cent, 26.3 per cent and 22.9 per cent, respectively, mainly due to the fact that Guatemala and Honduras are currently in the off-season of production and production has been reduced as a result of bad weather.

Although exports from Asia and the Pacific decreased, exports of Robusta bags increased by 13.4%. Production cuts in Vietnam and Indonesia, coupled with pressure on Eurasian routes caused by the Red Sea crisis, have led to a surge in global demand for Brazil's Robusta. In April 2023, Brazil exported only 120000 bags of robusta, up 448.6 per cent to 680000 bags in April this year.

In response, the international coffee organization ICO predicts that global coffee production in 2023 will increase 5.8% year on year to 178 million bags, of which Arabica coffee production is expected to be 102.2 million bags and Robusta coffee production is expected to be 75.8 million bags.

In 2022x23, due to the impact of the COVID-19 epidemic, the cost of living rose and disposable funds declined, resulting in a decrease in coffee demand by 2% to 173.1 million bags in 2022. However, there are signs of recovery and the global coffee consumption demand is beginning to increase. It is expected that the global coffee consumption demand will increase by 2.2% to 177 million bags in 2023.