Global Coffee Price Analysis for August 2024: Strong Increases and Volatile Exports Amid Economic and Geopolitical Challenges

Based on the Coffee Market Report for August 2024, published by the International Coffee Organization (ICO), Cofdar has conducted an in-depth analysis and comprehensive summary of the key points discussed in the report. This report reflects significant movements in coffee prices, changes in exports, and the economic and geopolitical challenges affecting the global coffee supply and demand.

In this review, we take a look at the most important information and data provided by the ICO regarding the prices of various coffee types, regional export trends, and how geopolitical events are impacting global coffee trade.

Coffee Price Performance in August 2024:

• Composite Indicator Price (I-CIP):
  • The average price was 238.92 US cents per pound in August 2024, representing a 1.0% increase compared to July 2024.
  • Prices fluctuated between 222.58 US cents and 254.12 US cents per pound throughout the month, with upward pressure continuing due to strong global demand and constrained supply.

Price Analysis of Different Coffee Types:

1. Colombian Milds:
   • Prices rose by 2.3% compared to the previous month, reaching 263.76 US cents per pound.
   • This increase is attributed to the growing demand and high quality of this coffee type.
2. Other Milds:
   • Prices reached 261.44 US cents per pound, an increase of 1.7% compared to July 2024.
3. Brazilian Naturals:
   • Prices of Brazilian Naturals rose by 1.0% to 242.19 US cents per pound.
4. Robustas:
   • Robusta prices remained stable in August, with an average price of 214.68 US cents per pound. Despite the stability, these prices are at their highest level in 47 years, driven by strong demand and supply shortages in key producing regions like Vietnam.

Key Economic Insights:

1. Global Supply and Demand:
   • Data shows continued strong demand for coffee worldwide, while markets face supply shortages. This has contributed to rising prices, particularly with ongoing geopolitical tensions impacting traditional shipping routes like the Suez Canal.
   • The cumulative deficit between supply and demand over the past six years has reached -13.1 million bags, indicating that the market is grappling with a lack of supply to meet demand.
2. Regional Export Performance:
   • South America: The region saw a substantial 26.0% increase in exports in August 2024, with Brazil being the main contributor to this growth, thanks to increased exports of Brazilian Naturals.
   • Africa: Exports rose by 34.7% year-on-year, with Ethiopia and Uganda driving this growth. Ethiopia recorded a 63.3% increase in its exports.
   • Asia & Oceania: Exports dropped by 8.1%, mainly due to a decline in Vietnam’s exports, which have been impacted by local supply shortages.

Economic and Geopolitical Influences:

• Rising interest rates in major markets have reduced the feasibility of holding large coffee stocks at low costs, pushing many to rely on just-in-time purchasing. This approach has added short-term price pressures as financing bulk purchases becomes less competitive.
• Geopolitical tensions, particularly in the Middle East, have disrupted global shipping routes. Shipments have been diverted away from the Suez Canal to the Cape of Good Hope, leading to increased transportation costs and delivery delays.

Exports by Coffee Types in August 2024:

• Global green coffee exports in August 2024 totaled 10.03 million bags, marking a 9.6% increase compared to the same month in the previous year.
  • Colombian Milds: Exports increased by 17.7% year-on-year to 1.05 million bags.
  • Brazilian Naturals: Exports rose by 18.0% to 3.13 million bags.
  • Robustas: Exports saw a slight increase of 3.3%, reaching 3.71 million bags.

Market Outlook:

• Coffee prices are expected to remain elevated if geopolitical tensions and shipping constraints continue. Any reduction in global interest rates could increase available financing for coffee traders, potentially leading to a rise in stockpiling and a long-term decrease in prices.
• However, the market remains tense due to ongoing supply constraints, and significant price relief is unlikely unless economic and geopolitical conditions improve markedly.

Conclusion:

The August 2024 report highlights continued upward trends in global coffee prices, driven by increasing demand and constrained supply, particularly in the face of geopolitical tensions and rising shipping costs. Africa and South America stand out as key regions of export growth, while Asia, especially Vietnam, faces challenges due to supply shortages.