Average coffee futures price benchmarks at London and New York (NY) InterContinental Exchanges (ICE) reached multi-year highs in June, amid bullish speculation regarding drought-impacted Brazilian supply, Colombian port disruptions and high freight and shipping costs, among other factors.
The NY ICE arabica price rallied for the eighth consecutive month, averaging USc 158/Ib in June 2021, which is the highest monthly average since November 2016, representing respective growth of USc 8.8/Ib (+6%) month-on-month (m-o-m) and USc 59.8/Ib (+61%) year-on-year (y-o-y). Dry weather in key Brazilian growing states undermined the yield potential for the current 2021/22 ‘off-year’ crop, which is in the harvest period, thus fuelling market bullishness. There are also heightened concerns regarding the drought impact on the 2022/23 crop development. This is compounded by supply disruptions in Colombia, the world’s second-largest arabica producer, where port strikes have affected shipments from Buenaventura port, necessitating slow and costly overland transport to other Colombian ports.
The London ICE robusta benchmark averaged USD 1,629/MT in June 2021, increasing by USD 105/MT (+6.9%) m-o-m and by USD 420/MT (+34.9%) y-o-y respectively, representing a 31-month high, following an eight-month rally. Robusta prices have gained support from a general rise in commodities prices evident in Q2 2021, in addition to high freight costs related to container shortages hampering exports from Vietnam, the world’s largest robusta supplier.