Posted on Tuesday 18th, June 2013.
Coffee prices declined further in May 2013, causing the International Coffee Organisation (ICO) composite indicator price to fall to 126.96 US cents/lb, its lowest monthly average since April 2010.
The significant reductions in Arabica prices are having a negative effect on revenue for coffee producers, the ICO says in its May Coffee Market Report.
Monthly shipments have consistently maintained a volume of eight to ten million bags since the beginning of 2012, but the revenues accruing from these exports have declined, from over US$2 billion to around US$1.5 billion.
The ICO states that this problem is compounded by the fact that the cost of production has been rising in many exporting countries.
Whether the price paid to coffee growers has dropped below the cost of production will vary from country to country, but the trend appears to be heading in that direction.
Exports by all exporting countries reached 9.6 million bags in April 2013, a 4.4 per cent increase on April 2012.
This brings total exports for the first seven months of coffee year 2012-13 (October to April) to 66 million bags, a 7.1 per cent increase on the 61.6 million bags exported in the same period last year.
Total production in crop year 2012-13 is currently estimated at 143.3 million bags, an increase of 6.9 per cent on the previous year.