Drinks

Arabica Coffee Prices To Drop 12% As Global Surplus Forecast

By Dave Simpson
Arabica Coffee Prices To Drop 12% As Global Surplus Forecast

Arabica coffee prices KCc2 are forecast to post an annual drop of 12% in 2023, with a large crop in top producer Brazil expected to lead to a global coffee surplus in the 2023/24 season, a Reuters poll of 10 traders and analysts showed on Monday 6 February.

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Prices were seen ending 2023 at $1.48 per lb, down 15% from Friday 3 February's close and 12% lower than levels seen at the end of 2022, according to the poll's median forecast.

Robusta coffee prices LRCc2 were seen ending 2023 at $1,900 per tonne, down 6% from Friday's close but 6% above levels at the end of 2022.

Poll participants said the size of Brazil's 2023/34 production would play a key role in determining prices with some uncertainty about whether the huge crop that had initially been expected will actually be harvested.

Brazil's coffee crop in 2023/24 was forecast to climb to 67.1 million 60 kg bags, up from a median estimate of 61.5 million bags for the 2022/23 crop.

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The median forecast was, however, below the consensus of 71 million bags in a Reuters poll issued in July 2022 with the crop not developing as well as expected possibly because the trees were not healthy enough after a very dry winter in Brazil.

Top robusta producer Vietnam was forecast to have a crop of 31 million bags in 2023/24, up from 30 million in 2022/23.

Larger crops in Brazil and Vietnam were seen leading to a global surplus of 3.35 million bags in 2023/24 compared with a deficit of 4.15 million in 2022/23, according to the poll's median forecasts.

Additional Information

Poll participants also cited the potential for curtailed demand - due to high retail prices and a global economic downturn - as a factor in the bearish outlook for prices.

Read More: Brazil's New Coffee Crop Seen Up 10% At 64m Bags - Trader

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.