According to the latest Coffee Market Report (August 2021 ), issued by the International Coffee Organization (ICO) , “ Coffee prices continued to rise in August 2021, with concerns about future supply and rising transportation costs being the main drivers of the market.”
Coffee prices have continued to rise for ten consecutive months. The main causes are associated with unfavorable weather conditions in some of the main producing countries, as well as rising transportation costs and the disruption to trade flows in Asia due to COVID-19 restrictions and emergency closures.
For its part, the National Federation of Coffee Growers (FNC) points out that the value is subject to three variables: the New York Stock Exchange, the Colombian coffee differential, and the exchange rate, which determine the price in Colombia, which explains the product's high price.
Coffee production projection for the 2020/2021 coffee year
The ICO estimates that total production for coffee year 2020/21 will be 169.64 million bags, a marginal increase of 0.4% compared to the 169.0 million bags for coffee year 2019/20. However, a considerable reduction in global production is expected in coffee year 2021/22 due to climatic disruptions affecting some major countries of origin.
Colombia is no exception to this reality, as according to FNC records , Colombian coffee production fell by 16% in August , stating that “ Colombian coffee production, the world's largest producer of washed mild Arabica coffee, was 915,000 60kg bags of green coffee, down 16% from the 1.1 million bags recorded in August 2020.”
So far this year (January-August), production has exceeded 7.8 million bags, 8% less than the more than 8.5 million bags produced in the same period last year.
Over the past 12 months (September 2020–August 2021), production fell 7% to nearly 13.2 million bags, down from 14.2 million in the same period last year.
And so far this coffee year (October 2020-August 2021), production has reached nearly 12.2 million bags, down 7% from 13.1 million bags in the same period last year.
The FNC union stated that "The observed production performance is primarily due to logistical problems in coffee exports, resulting from the public order situation in May and June. Road and port blockades prevented the shipment of coffee, especially in Buenaventura, which caused a backlog at the ports, which is only now being fully resolved."
In summary
Considering the rising price of coffee compared to the decline in coffee production in Colombia, it is difficult to predict market performance in the near future, especially considering the spread of new strains of COVID-19, which has forced changes in routines and restrictions on the mobility of millions of coffee pickers, transporters, and consumers around the world.