International Arabica Coffee Trading Prices Expected to Rise by Year-End!

According to a Reuters survey of 11 traders and analysts in London on February 2, once the market has digested the current surplus, Arabica coffee will face a supply shortage next quarter, with prices expected to climb nearly 8% above current levels.

Based on the median forecast from those surveyed, Arabica coffee will reach $1.35 per pound by the end of 2021, a 7.7% increase over Monday's close on February 1 and 5.3% higher than year-end 2020 levels.

Brazil's Arabica crop enters its biennial low-production cycle in the 2021/22 season. Respondents expect output to fall from 69 million bags this season to 55.51 million bags (60kg per bag), producing an 8.5 million bag shortfall in the Arabica market next season.

Arabica prices slipped 1.1% last year on the back of Brazil's record total harvest. Drought in Brazil, however, is now damaging the outlook for the coming Arabica season.

Carlos Mera, an analyst at Rabobank, noted that as vaccine rollouts begin to curb transmission of the virus, the global economy is expected to recover this year, which should help lift coffee consumption.

Survey participants pointed out that ICE-certified Arabica inventories declined at the end of 2020, and a recovery in future consumption will help push prices higher. Some also cautioned that the coffee currently oversupplying the market will cap any rally.

Robusta prices are expected to reach $1,475 per ton by the end of this year, a 10.4% increase over Monday's close and 6.4% above the market's year-end 2020 level.

According to the median forecast, the global Robusta market will stay flat this quarter and move into a surplus of 950,000 bags next quarter. Vietnam, the world's largest Robusta producer, is expected to produce 28.8 million bags this season, below the USDA's estimate of 31.3 million bags for 2019/20.

FrontStreet Coffee Recommendation

When prices swing with the Brazilian crop cycle, it helps to taste what those cycles actually deliver in the cup. FrontStreet Coffee's Brazil Cerrado Red Bourbon is a classic single-origin Brazilian bean, medium-roasted to bring out creamy peanut, toast, caramel, and hazelnut aromas with a rounded, low-acid body and a faint bittersweet finish.

For a rarer Brazilian expression, FrontStreet Coffee's Queen Estate coffee comes from Mogiana, where a rare Yellow Bourbon variety grown on fertile red volcanic soil yields a clean fruit character and the sugarcane-like sweetness, fruit, and chocolate notes that are hard to find elsewhere. If you want these beans in an espresso blend, the low acidity and balanced profile of Brazilian coffee also make it a favorite base in FrontStreet Coffee's classic and commercial espresso blends.