I-CIP Rebounds Back over 200 US cents/lb for the First Time Since February

CoffeeNetwork (New York) – The International Coffee Organization (ICO) has released their latest monthly report.

The ICO Composite Indicator Price (I-CIP) gained 4.5% from May to June 2022, averaging 202.46 US cents/lb for the latter. In June 2022, the I-CIP fluctuated between 197.37 and 206.40 US cents/lb. Average prices for all groups indicators increased in June 2022. The Brazilian Naturals outperformed all growths by gaining 5.8% from May to June 2022, reaching 230.40 US cents/lb. The Colombian Milds and Other Milds presented a similar positive trend, increasing by 5.3% and 5.1% respectively. The Colombian Milds averaged 301.57 US cents/lb in June 2022, whilst the Other Milds averaged 273.69 US cents/lb. This upwards trend is in part due to the 2nd and 3rd positions of the New York futures market which expanded by 4.9% from May to June 2022, ranging from 218.61 US cents/lb to 229.38 US cents/lb. The average of the 2nd and 3rd positions of the ICE Futures Europe for Robustas increased by 0.2%, helping to push the Robustas group indicator to 103.81 US cents/lb, up by 0.7% in June 2022.

The differentials between the Colombian Milds and Other Milds increased by 7.2%, from 26.02 to 27.88 US cents/lb from May to June 2022. Presenting the strongest growth for this period is the Brazilian Naturals and Robustas differential which expanded by 10.3%, from 114.75 to 126.59 US cents/lb. The Other Milds and Robusta differential rose by 8.0% from 157.32 to 169.88 US cents/lb. Presenting similarly strong growth is the Colombian Milds and Robustas differential, gaining 7.9% from 183.34 to 197.76 US cents/lb for the same period. The Colombian Milds and Brazilian Naturals differential presented 3.8% growth from May to June 2022, averaging 71.18 US cents/lb for the latter. However, the Other Milds and Brazilian Naturals differential presented the weakest growth at 1.7%, from 42.57 to 43.29 US cents/lb for the period. The arbitrage between New York and London Futures markets developed an 8.5% increase, ranging from 124.30 to 134.90 US cents/lb from May to June 2022.

Intra-day volatility of the I-CIP increased 0.5 percentage points between May and June 2022, reaching 11.0%. Robustas and the London futures market presented the lowest volatility amongst all group indicators, at 7.5% and 6.9% in June 2022, respectively. The Brazilian Naturals volatility was the highest amongst the groups, averaging 13.5%, a 0.4 percentage point growth from the previous month. The variation in volatility of the Colombian Milds and Other Milds for May to June 2022 is 0.5, increasing to 10.2%, and -0.1, decreasing to 11.0%, respectively. The New York futures market presented 0.7 percentage points of volatility, averaging 13.3% for the month of June 2022. The New York certified stocks decreased 11.2% from the previous month, closing in at 1.03 million bags whilst certified stocks of Robusta coffee reached 1.76 million bags, representing an increase of 2.9%.

Global exports of green beans in May 2022 totalled 9.75 million bags, compared with 8.8 million bags in the same month of the previous year, up 10.7%. Three of the four groups also increased their exports in May 2022, with Other Milds being the only form to record a decrease, falling by 12.6%. Despite the double-digit increase in May, for the first eight months of coffee year 2021/22, exports of green beans totalled 79.24 million bags, up only 0.2% versus 79.09 million bags for the same period in coffee year 2020/21. The reason behind the jump in the exports of green beans in May 2022 is the Colombian Milds, which rose by 149.2% in May 2022 to 1.0 million bags versus 0.4 million bags in May 2021.

The sharp increase in the growth of the Colombian Milds is technical, reflecting the 56% drop in exports in May 2021, which in turn was due largely to social unrest throughout Colombia, the main country of origin for this group, hampering the normal flow of exports. The export of 0.4 million bags in May 2021 is the lowest since 0.36 million bags of the Colombian Milds were exported in August 1977. The Brazilian Naturals form remains the primary reason behind the year-to-date fall in exports of green beans, with 25.86 million bags having been exported between October 2021 and May 2022, as compared with 28.38 million bags in the same period a year ago, down 8.9%. This drop in the cumulative volume of exports comes in the face of an improved performance in May 2022, with the shipment up 16.6% to 2.88 million bags from 2.45 million bags in May 2021. Along with a smaller crop harvested during its Arabica “off-season, the impact of the problems with containers and shipping in Brazil, the main country of origin for this group, reported earlier in the current coffee year, overhang the Brazilian Natural market. Shipments of the Other Milds decreased by 12.6% in May to 2.33 million bags versus 2.67 million bags in the same period last year. For the first eight months of coffee year 2021/22, exports of the Other Milds amounted to 15.48 million bags versus 14.63 million bags in October–May 2020/21, a 5.8% increase.

Exports of Robustas totalled 3.54 million bags in May 2022, as compared with 3.27 million bags in May 2021, up 8.4%. Exports of green beans for the first eight months of the current and previous coffee years for Robustas are 29.4 million bags and 27.27 million bags, respectively, up 7.8%. Total exports of all forms of coffee were up 10% in May 2022, totalling 10.8 million bags, while in the first eight months of coffee year 2021/22 they reached 87.99 million bags, with a consolidated increase of 0.7% In October 2021 to May 2022, South America’s exports decreased by 9.9% to 37.92 million bags. During this period, shipments from Brazil declined by 16.0% to 26.36 million bags versus 31.39 million bags in October–May 2020/21. Continuing issues with the availability of containers and reduced shipping capacity, albeit with reported improvements in recent months, together with a smaller crop harvested during its Arabica “off-season”, are the main reasons behind the sharp fall. The volume of exports from Colombia is down 2.3% for the first eight months of coffee year 2021/22 at 8.29 million bags versus 8.49 million bags for the same period last year. The fall in exports is linked to persistent unfavourable weather conditions which have reduced the available supply of coffee in the country.

Exports from Asia and Oceania increased by 16.9% to 3.72 million bags in May 2022, and by 19.7% to 31.13 million bags in the first eight months of coffee year 2021/22. Vietnam’s exports during these periods increased by 16.1% to 2.44 million bags, and 20.9% to 20.4 million bags, respectively. India’s shipments increased by 29% to 0.64 million bags in May 2022, and by 35.5% to 4.87 million bags in the first eight months of coffee year 2021/22. Exports from Indonesia increased by 8.4% to 0.52 million bags in May 2022, and by 5.1% to 4.91 million bags in October– May 2021/22.

Exports from Africa decreased by 0.9% to 1.29 million bags in May 2022 from 1.3 million bags in May 2021. For the first eight months of the current coffee year, exports totalled 8.65 million bags versus 8.82 million bags in coffee year 2020/21. Uganda’s exports have continued to fall, decreasing by 7.9% in May 2022 and 4.0% in October 2021–May 2022, as compared with the same period a year ago. Lower production stemming from droughts in some areas of the country’s coffee-growing regions also continues to explain the fall in Uganda’s exports of coffee. Tanzania’s exports are also down 3.6% in the first eight months of coffee year 2021/22 at 0.78 million bags as compared with 0.8 million bags in the same period last year. Meanwhile, exports from Ethiopia increased to 2.28 million bags in the same period, representing a rise of 18.9% from 1.91 million bags.

In May 2022, exports from Mexico and Central America were down 14.5% to 1.87 million bags as compared with 2.19 million in May 2021. For the first eight months of the current coffee year, exports are down 1.1%, totalling 10.29 million bags versus the 10.41 million bags recorded between October 2020 and May 2021. The region’s sharp downturn in May 2022 was due to the 37.3% fall in exports from Honduras, the region’s largest exporter, which shipped 0.52 million bags in May 2022 versus 0.83 million bags in May 2021. Over the first eight months of coffee year 2021/22, Honduras has exported 3.33 million bags, down 11.8% from 3.78 million bags in the same period in coffee year 2020/21. This poor performance by Honduras to date is related to less rainfall during the bean-filling period across a number of growing regions, as well as a high incidence of rust disease as a result of hurricanes Eta and Iota in 2020. Moreover, following an earlier outbreak of rust disease in 2012, stumping led a renewal process that reached peak production between the 2018/2020 harvests, hence the current downturn in the country’s coffee supply.

Total exports of soluble coffee increased by 3.0% in May 2022 to 0.98 million bags versus 0.95 million bags in May 2021. In the first eight months of coffee year 2021/22, a total of 8.19 million bags of soluble coffee were exported, representing an increase of 5.7% from the 7.74 million bags exported in the same period during the previous coffee year. As a result, the share of soluble coffee within the total exports of all forms of coffee has risen to 10.1% (measured on a moving 12-month average) in May 2022 versus 10.0% in May 2021. Brazil is the largest exporter of soluble coffee, shipping 2.61 million bags in the first eight months of coffee year 2021/22, followed by India and Indonesia with 1.45 million and 1.224 million bags exported over the same period, respectively.

Exports of roasted beans increased by 9.9% in May 2022 to 75,329 bags versus 68,539 bags in May 2021.

The latest provisional outlook for total production in coffee year 2021/22 remains unchanged at 167.2 million bags, a 2.1% decrease versus 170.83 million bags in the previous coffee year. World coffee consumption is still projected to grow by 3.3% to 170.3 million 60-kg bags in 2021/22 as compared to 164.9 million for coffee year 2020/21. In 2021/22, consumption is expected to exceed production by 3.1 million bags. However, exogenous factors such as reduced global economic growth and increased cost of inputs, production and trade may affect both supply and demand in the remaining four months of coffee year 2021/22.

Alexis Rubinstein