Coffee Outlook Q2 2021: A Market in Panic

ICE Arabica coffee prices are trading above USc 160/lb at the time of writing, a stellar level. The market is almost exclusively focused on the upcoming deficit in the 2021/22 crop, and a few other factors exacerbate those concerns: road blocks in Colombia, currency movements, high shipping costs globally and worries about warehouse closures and farmer defaults in Brazil.

Report highlights

We have increased our Brazil 2020/21 arabica production outlook from 49m to 53m bags, following the surprising results of our stock survey. This new figure allows for an increase in Brazil domestic stocks of 6.4m bags between March 2020 and March 2021, in line with our survey results. There is a lot of coffee around, but it has become hard to get.

The current harvest in Brazil (2021/22) could well be lower than expected (our expectations stands at 36m bags), but the current stock levels seem high enough to face the deficit. The size of the 2022/23 crop is a subject of much debate, and some of its potential may be compromised, but it is still very early days to say anything of substance.

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