UNCTAD Secretary-General's Multi-Stakeholder
Meeting on Coffee
8 April 2009, Geneva
Market trends and underpinning factors
in the world coffee market
by
Mr. Kaison Chang,
Senior Economist, FAO/EST
"The views expressed are those of the author and do not necessarily reflect the views of UNCTAD"
Market trends and underpinning factors in the
world coffee market
(Kaison Chang – Senior Economist, EST)
1
Composite indicator price
US cents / lb
130
120
110
100
90
80
70
60
50
comp price
40
2000 2001 2002 2003 2004 2005 2006 2007 2008
2
International Market Balance for Coffee
9000
thousand tonnes
8000
7000
6000
5000
Consumption
Production
4000
3000
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
3
World Coffee Production
(Thousand Tonnes)
8600
8400
8200
8000
2008
2015
7800
7600
7400
7200
2008
2015
4
World Coffee Consumption
(Thousand Tonnes)
8400
8200
8000
2008
2015
7800
7600
7400
7200
2008
2015
5
Implication of these trends
• 200 000 tonnes surplus by 2015.
• Growth in output greater in LA rather than
Asia as was the case over the last decade
• The decline in Africa will be halted
• The growth in consumption would be faster
in developing than in developed countries.
• Growth in developing countries from
increases within producing countries, and
hence, international trade would grow
slower.
• This scenario, however, is subject to any
sudden and substantial changes in the
world coffee economy.
6
International coffee prices
annual average
280
260
US cents/lb
240
Arabica
220
200
180
160
140
120
100
80
Robusta
60
Composite
40
20
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
7
Real Coffee Prices
annual average deflated by MUV 1990=100
500
Arabica
450
US cents/lb
400
350
300
250
200
150
100
Robusta
Composite
50
0
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
8
Primary determinant - Price
• The price crisis - important implication for
the world coffee economy.
• Adversely seriously affected incomes
• Differences arise with various economic
factors such as production cost and
exchange rates.
• This variation may change competitiveness
among exporters
• Prompted various international initiatives to
boost consumption.
• All these factors may affect the demand and
supply conditions but price would continue
to be the primary determinant.
9
The financial crisis
• The impacts of the financial crisis include:
– reduction in growth rates and demand,
– exchange rate changes,
– availability and cost of credit; and
– external funding, including aid.
• Ag commodity prices follow oil prices
• The crisis and recession contributed to
dramatic fall in ag. commodity prices.
• Difficult to separate the impacts with market
adjustments
• Impact of downturn on China and India
• Availability of credit and liquidity is another
constraining factor.
10