Why Did Coffee Prices Slip To Near 13-Year-Low And What To Expect From It Over The Short Run?

Why Did Coffee Prices Slip To Near 13-Year-Low And What To Expect From It Over The Short Run?

Coffee prices stumbled and fell drastically, with U.S. Coffee C futures dropping from a high of $125.50 (day’s high on 19th October 2018) to the level of $94.50 (day’s low on 12th March), which almost touched the previous 13 year low of $93.50 made in October 2016. The drastic fall in coffee prices is attributable to the emergence of major coffee producers such as Brazil and Vietnam in terms of production of both Arabica and Robusta Coffee.

The major contributor to the fall in the coffee prices was increased level production of Brazil in 2018 amid favourable weather conditions and a high number of trees reaching the biennial production cycle.

Over the long term also, coffee prices slumped amid years of high local prices in Brazil, which provided an impetus to the local farmers to invest more in the commodity production and yield more as weather conditions favour the output.

As per the U.S. Department of agriculture, Brazil is likely to hit another high production in the year 2019, after it produced 60 million of 60-kg bags in 2018, despite the fact that the trees in Parana and the southeast of Minas Gerais being in an “off-cycle” of the biennial production cycle.

The development in the production from Brazil and other coffee producers such as Vietnam, Central America contributed towards the fall on coffee prices. However, the stumbled prices halted the steep fall on account of changing the trend of coffee demand and the role of emerging coffee vendors such as Starbucks.

The shifting of a trend in China along with off-cycle production concerns as trees in major producing area enter into the period of rest is expected to support the coffee prices. The production loss from Brazil is expected to support the coffee prices over the short term.

As per the study report from USDA, the young Chinese population is drifting from the traditional habit of tea towards coffee. The shift in the habit of Chinese youngster looks sufficient to support the coffee prices over a short term before another heavy production from Brazil arrives in the global market.

The major Coffee vendors, such as Starbucks are also playing a part in shifting habits of Chinese youngster from tea to coffee, in terms of more investment in the country, more outlets and promotion of coffee culture, where along with coffee selling, it’s harvesting and coffee methodology is also explained to the consumers.

Apart from shifting tradition and measures adopted by vendors to save their business, the U.S. consumption is also supporting coffee prices. An American consumer drinks an average of almost two cups of coffee a day. However, with the high demand, high production offsets any benefit to coffee prices from the consumption.

To further gauge over the short-term and long-term trend in coffee prices, the agriculture investors are keeping their heads up towards the sky to spot any change in prevailing weather conditions over high production areas to reckon the future production level of the commodity.


This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.

Top 25 Dividend Stocks To Consider

People prefer a dividend stock in their portfolio as it possesses the feature of compounding. Compounding means that the earning which is generated through these dividend stock will get reinvested and will eventually create earnings from earning. More precisely, the dividend generated from these dividend stock will get reinvested to buy another set of a share of the dividend stock which results in giving a higher dividend.

Click here to download your top 25 dividend stocks report!

6 Cannabis Stocks under Investor’s Limelight…

Cannabis companies that sell both medicinal weed and recreational pot. Marijuana stocks to look at. Marijuana mergers and acquisitions. Dispensary data analytics. Upcoming marijuana IPO’s Those phrases have become increasingly common as marijuana legalization spreads.

Global spending on legal cannabis is expected to grow 230% to $32 billion in 2020 as compared to $9.5 in 2017, according to Arcview Market Research and BDS Analytics. As of June 29, 2018 the United States Marijuana Index, despite a lot of uncertainty around regulations, has over the past 1 year gained 71.49%, as compared to about 12% gain seen by the S&P 500.

Click here for your FREE Report


Please enter your comment!
Please enter your name here