Daily Management Review

Coffee prices show greates drop in 5 years


Since the end of March, the cost of Arabica coffee futures fell by 16% - this is the strongest quarterly drop in five years. Experts see the reason for this in investors' fears of a decline in coffee consumption amid the novel coronavirus pandemic and in a change in demand patterns.

The current fiscal quarter will be the worst for coffee prices in five years, Bloomberg writes. According to the agency, Arabica coffee futures have fallen in price by 16% since the end of March. The decreased coffee consumption can be explained by quarantine measures in many countries and associated economic recession. 

On June 29, Arabica futures for September delivery rose 3.8% to $ 1 per pound of coffee (approximately 450 grams) - a price close to the minimum since last October. Robusta coffee rose by 2.3%, the quarterly decline slowed to 0.6%.

For now, the coffee market is supported by growing sales of coffee beans on Amazon: investors see this as signs that coffee consumers have switched to online purchases, writes Bloomberg. In addition, the market is strengthened by reports that Brazil has already managed to sell 60% of the 2020 crop, the agency quoted Rabobank International as saying. The news has strengthened Arabica prices, but declining demand and a recession are holding it back anyway, said Rabobank analyst Carlos Mera.

source: bloomberg.com