Coffee prices will increase by the end of 2020 despite the oversupply

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According to a newly published Reuters survey, the price of coffee futures contracts, both arabica and robusta, is expected to increase slightly by the end of 2020 compared to the current price, despite the supply may increase in the season. 2020-2021.

Price of arabica coffee futures is forecast to reach 1.2 USD / pound by the end of this year, 0.9% higher than last Friday’s closing price (July 31). Meanwhile, robusta is forecast to increase by 3.42% to US $ 1,390 / ton by the end of December compared to the previous week.

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Global coffee surplus will increase from 1.85 million 60 kg bags to 5 million bags in the 2020-2021 crop. Photo: Wikipedia.

“Many commodities will face a difficult period ahead,” said strategist Stephen Platt, referring to the slumping demand caused by the Covid-19 pandemic despite stimulus programs. The pandemic could help increase low-level coffee consumption in large markets like Brazil, but the decline in sales in its industrial markets will be partially offset by domestic consumption”.

According to the survey participants, the global supply of coffee will increase from 1.85 million bags of 60 kg to 5 million bags in the crop year 2020-2021, mainly due to the increase in arabica supply in the context of weakening demand. . Cafes around the world, which are the biggest customers of arabica coffee, have been closed for months due to the disease.

The traders and analysts who participated in the Reuters survey both forecast robusta consumption will increase as supermarket sales increase as more people work from home because of the pandemic. Retailers often produce finished coffee with higher levels of robusta. Besides, instant coffee is also produced mainly with robusta coffee. Robusta coffee demand is forecast to exceed 1 million bags supply in the crop year 2020-2021, while arabica coffee has a surplus of 5.9 million bags.

Among the biggest coffee producing countries, Brazil is forecast to harvest a record 69 million bags in the crop year 2020-2021, while Vietnam will produce 29.2 million bags.

Source: ndh.vn