UNCTAD Secretary-General's Multi-Stakeholder
Meeting on Coffee
8 April 2009, Geneva
Coffee market outlook
by
Mr. Néstor Osorio
Executive Director, International Coffee Organization
"The views expressed are those of the author and do not necessarily reflect the views of UNCTAD"
COFFEE MARKET OUTLOOK
UNCTAD MULTI-STAKEHOLDER
CONSULTATION
08 April 2009
Geneva, Switzerland
Néstor Osorio
Executive Director
International Coffee Organization - www.ico.org
Summary
Ð Long-term trends 1990-2008
Ð Short-term trends and current economic
crisis
Ð Conclusions
International Coffee Organization - www.ico.org
World production
Crop years 1990/91 to 2008/09
International Coffee Organization - www.ico.org
World production by region
Crop year 1990/91
International Coffee Organization - www.ico.org
World production by region
Crop year 2008/09
International Coffee Organization - www.ico.org
Total exports to all destinations
Calendar years 1990 to 2008
International Coffee Organization - www.ico.org
World consumption
Calendar years 1970 to 2008
International Coffee Organization - www.ico.org
World consumption by region
Calendar year 1990
International Coffee Organization - www.ico.org
World consumption by region
Calendar year 2008
International Coffee Organization - www.ico.org
World: shift in consumption by area:
2000-2007
6.0
5.4
5.0
4.0
4.0
3.8
m illio n b a g s
4.0
3.1
3.0
2.0
1.0
0.5
0.0
Latin America
North America
Western Europe
Asia & Oceania
Eastern Europe
Africa
* Estimated
International Coffee Organization - www.ico.org
World: shift in exports by type of coffee
International Coffee Organization - www.ico.org
USA: shift in imports of green coffee
by group: 2000-2007
3000
2 261
2000
1000
500
0 0 0 ba g s
240
0
Washed Arabicas
Natural Arabicas
Robustas
-1000
-2000
-3000
-2 724
International Coffee Organization - www.ico.org
Unspecified
USA: shift in imports of green coffee
by origin: 2000-2007
2 500
2 119
2 000
1 500
875
1 000
726
143
113
C o st a R ic a
-563
M e x ic o
E l S a lv a d o r
-358
G u a t e m a la
-265
In d ia
-186
T h a ila n d
H o ndura s
G erm a ny
In d o n e sia
-110
C ô t e d 'Iv o ir e
-1 000
V ie t n a m
-500
C o lo m b ia
0
B r a z il
0 0 0 ba g s
264
E t h io p ia
428
500
-646
-1 500
-2 000
-2 500
-2 348
-3 000
International Coffee Organization - www.ico.org
Germany: shift in imports of green
coffee by group: 2000-2007
2 700
2 401
2 400
2 031
2 100
1 800
1 500
0 0 0 ba g s
1 200
900
600
300
0
Washed Arabicas
Natural Arabicas
-300
-600
-625
-900
International Coffee Organization - www.ico.org
Robustas
Germany: shift in imports of green
coffee by origin: 2000-2007
2 750
2 500
2 250
2 000
1 750
1 500
1 000
750
500
250
-750
International Coffee Organization - www.ico.org
G u a t e m a la
E l S a lv a d o r
In d ia
C o st a R ic a
K eny a
P a pua N ew
G u in e a
N ic a r a g u a
M e x ic o
H o ndura s
-500
P eru
-250
B r a z il
0
V ie t n a m
0 0 0 ba g s
1 250
Italy: shift in imports of green coffee
by group: 2000-2007
1 200
1 056
1 050
900
0 0 0 ba g s
750
600
450
358
300
150
103
95
Robustas
Unspecified
0
Washed Arabicas
Natural Arabicas
International Coffee Organization - www.ico.org
Italy: shift in imports of green coffee
by origin: 2000-2007
1 200
1 004
1 000
800
553
0 0 0 ba g s
600
369
400
204
200
129
104
52
0
Brazil
Vietnam
India
Colombia
Germany
Indonesia
Ethiopia
France
-56
Costa Rica
-98
Côte d'Ivoire Congo, Dem.
Rep. of
Cameroon
-200
-192
-201
-312
-400
International Coffee Organization - www.ico.org
ICO composite indicator price
Annual averages 1990 to 2008
International Coffee Organization - www.ico.org
ICO group indicator prices
Annual averages 1990 to 2008
International Coffee Organization - www.ico.org
Value of exports of coffee
Coffee years 1990/91 to 2007/08
* Estimated
International Coffee Organization - www.ico.org
Impact of the financial crisis
Ð Coffee prices
Ð Supply
Ð Demand
International Coffee Organization - www.ico.org
ICO composite indicator price
Monthly averages: Jan-05 to Mar-09
International Coffee Organization - www.ico.org
Impact on supply 1
Ð Production costs
– Steadily rising in recent years
– Prices of key inputs (fertilizers + oil)
now declining
– Price of labour not affected
International Coffee Organization - www.ico.org
Impact on supply 2
Ð Influence of exchange rates:
– In countries with exchange rate linked to
the US$, coffee prices have fallen in local
currency and production has become less
attractive
– In countries with flexible exchange rates,
coffee prices almost unchanged in local
currency
International Coffee Organization - www.ico.org
Impact on supply 3
Ð Some production costs may fall in line with
cheaper inputs.
Ð Sacrcity of credit to farmers may reduce care
of plantations
Ð Exchange rate movements will play an
important role in determining attractiveness of
investments in new plantings.
Ð Response will not be uniform, but vary from
country to country.
International Coffee Organization - www.ico.org
Impact on supply 4
Ð Overall volume of supply tight in short-term
– Short-term fall in production in Colombia
and Central America
– Off-year of biennial cycle in Brazil
Ð In long-term, current price levels do not
stimulate new plantings, especially of
Arabica coffee
International Coffee Organization - www.ico.org
Impact on demand 1
Ð In recent years, consumption has increased
steadily at a rate of 2.5% p.a., from 104.6 million
bags in 2000 to 128 million bags in 2008.
Ð This growth rate is not evenly distributed.
Growth rates are more vigorous in emerging
markets and in producing countries.
Ð Current crisis may decrease growth rate, but no
significant adverse effect on overall level of
demand is expected.
International Coffee Organization - www.ico.org
Impact on demand 2
Developed country markets
Ð 58% of world consumption
Ð Shift in types of coffee consumed
(“downtrading”):
– Out-of-home to in-home
– Higher price to lower price, with possible impact
on market for specialty coffee
Ð Overall volume of consumption not expected
to be adversely affected
International Coffee Organization - www.ico.org
Impact on demand 3
Producing country markets
Ð 26% of world consumption
Ð Influence of exchange rates:
– In countries with exchange rate linked to the
US$, coffee prices have fallen in local currency
and internal consumption may be stimulated
– In countries with flexible exchange rates, prices
almost unchanged in local currency
Ð Overall volume of consumption unlikely to
be adversely affected
International Coffee Organization - www.ico.org
Impact on demand 4
Emerging markets
Ð 18% of world consumption
Ð Vulnerabilities:
– Coffee still a “luxury” good
– Possible devaluations of local currencies vs. US$
may increase coffee prices to consumers
– Macroeconomic dislocations (unemployment,
lack of credit) may reduce demand
Ð Effect on consumption still uncertain
International Coffee Organization - www.ico.org
Impact on prices
Ð Coffee prices have recovered from the
low levels recorded during the coffee
crisis (2000-2004).
Ð After beginning of crisis in September/08,
prices fell in line with other commodities
and appreciation of US$.
Ð Since January/09, prices have recovered
in line with firm coffee fundamentals.
International Coffee Organization - www.ico.org
International Coffee Organization - www.ico.org