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GLOBAL COFFEE DEMAND EXPECTED TO DROP

Coffee

With consumption impacted by the effects of COVID-19, according to the latest Coffee Outlook report from agribusiness specialist Rabobank the global coffee demand is expected to drop by one million 60-kilogram bags this year.

In its report, Rabobank estimates global coffee demand to decline by 0.8 percent to 164.1 million bags in 2020. The report also said that specific coffee segments remain uncertain. In particular out-of-home consumption, with the bank trimming its demand expectations in many countries due to the extent of lockdowns and the significant increases in unemployment, particularly in countries without unemployment benefits, as a result of the COVID-19 pandemic.

Carlos Mera, a senior analyst at Rabobank Agri Commodity Markets Research, estimated that coffee demand is expected to drop by two percent in the United States in 2020. Impacted by the decline in out-of-home coffee purchases and the country’s low level of unemployment benefits reducing consumer spending. Higher supermarket coffee sales were unlikely to offset the drop in out-of-home consumption witnessed in April.

Mera also added that in Europe, it is not expected such a significant drop in demand because income levels of those unemployed are more protected in most EU countries.

The report stated that global coffee production remains relatively without disruption, except for potential delays at both farm and port level. The current harvests are going ahead more or less frequently, but the critical risk occurring in Brazil is the world’s largest coffee producer, where harvest coincides with projected peak COVID-19 infection rates.

This situation won’t necessarily translate to lower prices for the consumer, as there is a lot more that contributes to the cost, such as labour, business overheads, and other expenses that play a significant part in the coffee demand.

What do you think?

Written by kristina

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