For global coffee market, consumption is expected to rise by 3.3% to 170.3 million bags (60 kg/bag) in the 2022-2023 harvest, rising from 164.9 million bags in the 2020-2021 crop. Thus, consumption is predicted to exceed supply by 3.1 million bags.
Production report of the coffee market in November 2022
The International Coffee Organization (ICO) anticipates global coffee production for the crop year 2022-2023 at 167.2 million bags, a 2.1% decrease from 170.8 million bags in the previous crop year. In the 2022-2023 harvest, global coffee consumption is expected to rise by 3.3% to 170.3 million (60 kg/bag), up from 164.9 million bags in the 2020-2021 crop. As a result, consumption is predicted to exceed supply by 3.1 million bags.
- Honduras: The coffee industry is still struggling with leaf rust, and production in Guatemala is declining owing to the harsh environment and manpower scarcity.
- Colombia: Coffee production is expected to fall by 12% as a result of the La Nia phenomenon, which causes more rain, affecting the country’s coffee crops.
- Brazil: The United States Department of Agriculture (USDA) recently adjusted Brazil’s production by 2.6% to 62.6 million bags.
Consumption report of the coffee market in November 2022
According to the International Coffee Organization, worldwide coffee exports in October, the first month of the crop year 2022-2023, totaled just 9.7 million bags (60 kg/bag), a 1.9% decrease from the same period last year.
- Green coffee bean accounts for 88% of export volume at approximately 8.5 million bags, a 2.5% decrease from the previous year. This reduction was observed throughout all coffee groups, but the Brazilian arabica group, on the other hand, began the current crop year with a very positive outlook, increasing by 0.5% over the same period last year and recording an increase for the third consecutive month, reaching 3.4 million bags.
Robusta was the coffee category that saw the highest decrease in the first month of the 2022-2023 crop year, with a 4.8% decrease to 2.8 million bags. All major Robusta exporters decreased in October, with the exception of India and Indonesia, with Uganda down 6% and Vietnam down 19.5%.
- In contrast to green coffee, global instant coffee exports increased by 10.9% year on year in October to 1.2 million bags. Instant coffee currently accounts for 9.5% of total global coffee exports, up from 8.9% in the same period last year.
Brazil, the world’s top supplier of instant coffee, exported 291,345 bags to the international market in October, a 6.2% decrease year on year. However, the export volume of instant coffee from India and Indonesia increased by 25% and 33.7%, respectively, reaching 180,000 bags and 397,805 bags.
- Roasted Coffee: Exports of roasted coffee declined by 18% last month, to 61,226 bags, from 74,697 bags in the same period last year. Except for Asia, exports declined in the most of areas.
South America: Coffee exports declined by 0.2% in October compared to the same period last year, reaching over 5 million bags.
Asia and Oceania: This region’s exports climbed by 10,000 bags to 3.2 million bags. However, regional exports showed mixed results, with India and Indonesia increasing by 15.1% and 34.5%, respectively, to 0.5 million and 1.1 million bags, while Vietnam decreased by 19.5% to 1.4 million bags.
Africa: Coffee exports were 1.1 million bags in October, a 2.4% decrease year on year.
Central America and Mexico had the greatest decrease in October, with a 14.6% year-on-year drop to 0.5 million bags.
Price movement of coffee
In November, the global composite coffee price index fell 12.3% month on month to an average of 156.8 US cents/lb, the lowest level since August 2021. The price varied from 151.4 to 164.2 US cents/lb.
According to the Import-Export Department, global coffee prices continued to fall in November. Consumption demand has fallen due to concerns about an economic recession, which has resulted from major central banks raising interest rates to control inflation.
This puts pressure on consumers, causing them to cut back on non-essential purchases. The International Monetary Fund (IMF) forecasts global growth of 3.2% in 2022, with the world’s two largest coffee-consuming markets, the United States and Europe, falling into recession. Concerns of an economic recession as a result of major banks raising interest rates to control inflation.
Coffee market forecast
According to the Import-Export Department, the global coffee market would remain under pressure due to abundant supply and slow demand.
According to the published data, the US GDP increased by 2.6% in the third quarter compared to the previous quarter. This will support the Federal Reserve (Fed) in maintaining to boost interest rates. Many largest central banks in the world will announce their final policy decisions of the year in December, bringing an end to a period of aggressive interest rate hikes to fight inflation.
On December 14, the Fed raised the policy rate by 0.5 percentage points, raising it from 4% to 4.5%, the highest level since 2007. Interest rates are predicted to remain high through 2023 and only begin to fall in 2024.
The European Central Bank (ECB) and the Bank of England (BoE) are expected to follow suit with an increase of 0.5 percentage point. Borrowing costs might also be higher in Switzerland, Norway, Mexico, Colombia, and the Philippines.
With a series of signs indicating that interest rates will continue to rise, we predict that coffee prices will stay under pressure in the near future as purchasing power is impacted by limited credit. However, the market has also shown positive signals. When the US Department of Agriculture (USDA) reduced the production of many major producing-coffee nations in the crop years 2022-2023 due to severe weather, funds and speculators returned to purchase.
Please see the article to learn more about coffee market: Basic Information & Forecast The Coffee Market In 2023
