Coffee Market Update May 2022

The Coffee Commune

By Raihaan Esat, General Manager of International Coffee Traders (ICT)

With continued coffee shortages on the horizon, now’s the time to secure your beans for 2023. Watch the full update here.

Green Bean Market Overview

Brazil Watch

With winter on the horizon and the cooler months approaching, Brazil is once again under threat of frost. We’ve already witnessed the major impacts Brazil’s last frost had on the global coffee market, and now we are holding on with anticipation hoping that we don’t see history repeat again.

The next two to three months will be critical, and can go one of two ways:

Another frost – This would indicate another jump in the coffee market, with green coffee prices increasing again in 2023 by around $2-$3 per KG (a conservative estimate).

No frost – This would indicate stability in coffee prices and a returned confidence to the market. This would afford a slight saving in 2023 by $0.5-$1 per KG.

Global Exports

The International Coffee Organisation (ICO) has reported an increase in average global exports of all forms of coffee (including Arabicas, Naturals and Robustas). This is mainly driven by higher volumes coming out of Asia – one of the fastest rising retail coffee markets – with countries like Vietnam and Indonesia leading the way.

However, other coffee producing regions such as Central and South America are slowing down production – so while there is an average increase overall, it’s not all coming from the same place.

With most Central and South American coffee producers having already contracted their stock from the latest harvest, this is a strong indicator that the market fundamentals remain unchanged. But with an ongoing increase in demand and a shortage of supply, this means prices are likely to remain quite high for the foreseeable future.

What this means for our clients

Consistent supply

Over the last two months, ICT have been analysing these long-term forecasts; as a result we have secured coffee well ahead of when we expect to need it. That means that we’re looking forward to supplying roasters in a stable and consistent way for the next six months, pending the expected frost in Brazil.

We’re currently looking ahead into 2023 to see what we can secure from the next harvest season early and ahead of time, so that coffee roasters don’t suffer the effects of coffee shortages.

Better pricing

Right now we currently have access to some excellent pricing with our producers for 2023 (coffee that is going to ship later this year for arrival in 2023). This means that we can offer our clients a saving of between 50 cents to $1 per kilo on most origins.

After the last two years, this is a welcome reprieve and will go a long way towards helping coffee roasters run sustainable and profitable businesses.

We’ll be reaching out to all of our clients in the coming weeks to discuss what 2023 looks like so that we can reduce the uncertainty around supply and pricing.

What’s coming up

Keep an eye on our website for more coffee-focused happenings and events, such as Coffee & Cocktail Competitions, Latte Art Smackdowns and a special masterclass on Water for Coffee. These events usually sell out pretty early, so it’s worth securing your spot as soon as tickets become available.

Until next time,

 

Raihaan Esat

General Manager, ICT

The Coffee Commune