Coffee Price Prediction In 2022: The latest forecasts and predictions about coffee prices next week on the world market and in 2022, according to an analysis by expert Helena Coffee Vietnam and world experts.
According to technical analysis, Robusta’s price is still struggling to accumulate and has not broken through the 1995-200 zone. If it breaks out, the next stop is the 2025-2030 zone, whereas the 1960-1965 temporary and the lower support zone of the price.
Factors affecting coffee prices futures this week
- Investors on financial exchanges have been racing to “avoid the storm” since the inflation rate figures of some developed countries were announced, and most importantly, the US. Specifically, the inflation rate for the year by June 22 in France was 5.8%, Spain at 10.2%, Germany at 7.6% and the US at 9.1%.
- US inflation alone reached a record level in 1981. What shook financial markets was investors’ fears of a hike in the US central bank’s (Fed) interest rate to a high rarely seen before. . Rumor has it it will be up to 1%, although the Fed’s leadership has so far only discussed the figure of 0.75%.
- They were followed by China’s release of economic data on June/22, including GDP growth of 0.4% and industrial output growth of 3.9% over the same period in 2021. Thus, the situation is not very positive due to the severely affected by the way to fight the Covid-19 epidemic in this country.
- The USD value index DXY had the opportunity to rise to the highest level in two decades, touching 109.14 points on July 14, but then softened to below 108 points as investors used this currency as a haven, haven for their business capital.
- Last week, London robusta prices fell to the lowest level in ten and a half months, and New York arabica touched below 195 cents/lb to the surprise of market participants.
- As of July 14, the standard inventories on the two exchanges compared to last week’s report were as follows: London robusta reached 107,500 tons from 107,560 tons compared to the previous week, and New York arabica continued to decline sharply to 750,042 bags (bag=60). kg) or 45,003 tons from the previous week 805,077 bags or 48,305 tons.
- According to Rabobank, prices will be more volatile in the coming weeks due to unstable demand and supply (the Brazilian harvest is delayed), logistical problems, the conflict between Russia and Ukraine and winter in Brazil with the danger of frost.
- Brazil said revenue from exporting coffee of all kinds in the crop year 2021/22 reached 8.1 billion USD, up 38.7% year-on-year despite a decrease of 6 million bags in exports. Brazil also set a target to increase sales by 50% in 2022/23, thanks to the increase in roasted coffee prices in the domestic market. Thus, Brazil will focus on stimulating domestic demand during the good season.
Below is the study of expert Helena Coffee Vietnam team ( according to NCIF source ):
- According to technical analysis, Robusta’s price is still struggling to accumulate and has not broken through the 1995-200 zone. If it breaks out, the next stop is the 2025-2030 zone, whereas the 1960-1965 temporary and the lower support zone of the price. The daily chart shows a faithful signal; the price trend has not been established clearly. We must keep an eye on EUR, USD interest rates and USD strength and wait for clear technical signals to have a suitable trading strategy.
- Although the capital management funds sold quite strongly last week, the two coffee exchanges closed only on the edge of oversold territory. They were not too deep to believe that they stopped selling to adjust capital.
- However, after a continuous sell-off, the bullish zone of London is currently located in the 1,950-1,960 area around MA5 and MA10.
- During the week, London established a dual resistance zone at 1,992. Now, this area also becomes vital to decide whether the price can go up or not. This week, when the price is above the 1,992 double top with heavy buying, it is a sign that the price can break through 2,000.
- If it loses 1,914, the downtrend is evident with the targets of 1,904 and then 1.883 to find 1.850.
- The Euro in the Euro-Usd (Eur/Usd) currency pair last week was at 1=1 parity the previous week. The depreciation of the Euro against the USD makes coffee traders in the world’s largest coffee-consuming region, the EU, worry a lot. Consumers must save money; otherwise, travel from the EU will be limited to the US, especially for shopping tourists.
- Meanwhile, the price of coffee on store shelves and in shops increased constantly. There is no need to cite reasons such as high sea and land freight, hot weather and high inflation when the family pocket is too thin to make homemakers have to calculate the loss. Consumers will be more willing to drink instant coffee, meaning robusta consumption may not be affected as much as arabica.
- However, the popular instant coffee brands still intensify the bitter taste of Robusta coffee. The brand “Costa living” is Europe’s most famous coffee brand, which has increased by a fifth in price in a year. Five other brands, including Kenco and L’Or, also increased by 19%. Prices increased so much that many supermarkets had to put up a warning “price has changed”. Instead of increasing the price, some instant coffee brands reduce the quantity, like some Nestle products. Nestle Azera is still selling at the old price, but before 100g/bottle, now it’s 90g. On June/22, some drinks under the Costa restaurant chain increased their prices by 30% after rising by 15% in November 2021.
- Coffee, milk and tea (tea) also increased in price for the same reason. Will the price of coffee on shelves and in shops increase even more? Thomas Pugh, the auditor of RSM, thinks that food prices increased by 8.5% on May/22. But this summer, maybe up to 15%.
Here are some coffee price forecasts for the next week and 2022 by organizations and experts:
The world political situation affects the price of coffee
- Geopolitical tensions between Russia and Ukraine have not shown any signs of abating, the market is concerned about reduced consumer demand, and tight spending in the short and medium term has prompted speculators to liquidate aggressively. It is expected that coffee prices may be under pressure in a short time due to the impact of geopolitical impulses.
- The impact of the Russia-Ukraine conflict also caused a severe shortage in the fertilizer market. The growing areas in Brazil demand a great deal of fertilizer from Russia and Ukraine, affecting coffee production costs.
- According to the US Department of Agriculture (USDA), Vietnam still has room to increase coffee exports to the world’s top 5 markets: the US, Germany, France, Canada and Italy. The recovery of major global economies has also helped boost coffee consumption. The increasing trend of instant coffee consumption helps increase the advantage of Vietnam’s Robusta coffee.
Global Coffee Price Prediction in 2022
- The Import and Export Department – Ministry of Industry and Trade forecasts that global coffee prices will decrease in the short term. Speculators withdrew capital to seek safe havens due to risk aversion when the tension between Russia and Ukraine escalated. In a long time, coffee prices should recover as tensions between Russia and Ukraine cool.
- Coffee on the two floors cannot avoid the downward pressure because the upcoming supply will be abundant from the two major producers, Brazil and Indonesia, which are about to start harvesting the new crop. Meanwhile, the pressure that the US Federal Reserve (Fed) will raise the introductory interest rate in USD is getting closer and closer.
- With the supply of robusta coffee added when Vietnam enters the harvest, we think coffee prices will decrease in the short term. Besides, domestic coffee will still be under pressure from the risk of world coffee prices falling when the supply is abundant from Brazil.
- The expectation that Europe and the US will reopen will support the recovery of global coffee demand.
In the long term, Reuters forecasts that the price of robusta coffee will fall below $ 2,000 / ton in the second quarter of 2022 when Brazil will harvest the new crop of Robusta coffee and boost sales.
- It is forecast that Vietnam’s coffee exports in 2022 (Coffee Price Prediction in 2022) will continue to be optimistic, thanks to abundant supply. FTAs create competitive advantages for Vietnamese coffee, and export prices are likely to remain high.
- The US Department of Agriculture (USDA) forecasts world coffee production in the 2021-2022 crop year to decrease by 8.5 million bags (or 4.8%) compared to the 2020-2021 crop year, to 167.5 million. bags (type 60 kg/bag). The reason is that Arabica coffee in Brazil enters a low-yield cycle every two years and is affected by adverse weather factors.
- The US Department of Agriculture (USDA) expects Arabica coffee production to decrease by nearly 30% in the 2021-2022 harvest due to high temperatures and prolonged drought. The current frost is expected to have a similar negative effect on crops in the next harvest season.
- According to a market research report, it is forecasted that in the period 2021-2025, the global coffee market will record an average growth of 7.6%. Factors driving the coffee market such as increasing coffee consumption population, rapid urbanization, rising incomes of Generation Z and growing preference for instant coffee
Forecast of coffee consumption in 2022
- The global instant coffee market will reach 17.3 billion USD around 2027. The fastest growing markets are expected to be the Middle East, Eastern Europe and Southeast Asia.
- Coffee consumption in the workplace in the US is estimated to increase by 24% by 2026, with sales of about $4.4 billion.
- Starbucks China plans to open up to 6,000 stores by the end of this year. Starbucks is investing in a Coffee Innovation Park in Kunshan, east China. This is the operating centre for distributing coffee products to the whole of China.
USDA coffee production forecast 2022
The US Department of Agriculture’s (USDA) forecast for world coffee production for the coffee year 2022/23 is up 4.7% year-on-year to 174.95 million bags, mainly thanks to Brazil in a good year of the biennial cycle time. USDA estimates global ending stocks also increased 6.3% to 34.704 million bags. This is said to be why the price of coffee derivatives dropped sharply last week.
Brazilian production forecast 2022
For the 2021-2022 crop year, the US Department of Agriculture (USDA) forecasts that Brazil’s coffee production will decrease by 13.6 million bags from the previous crop year to 56.3 million.
Arabica coffee production decreased by 14.7 million bags to only 35 million bags due to reduced production due to drought, frost and high temperature. In contrast, robusta production is forecast to increase by 1.1 million bags to a record 21.3 million bags.
- With reduced supplies, Brazil‘s coffee exports are expected to fall by 11.7 million bags from a record last season to 30 million bags, and stocks are forecast to fall by 500,000 to 2.9 million bags. Brazil’s coffee consumption is expected to grow to 23.7 million bags.
Besides the drop in output, Brazilian exporters face many obstacles in hiring cargo ships and containers, while shipping companies regularly delay and cancel shipments.
Colombia’s arabica production in the 2021-2022 crop is forecast to increase by 400,000 bags to 13.8 million bags under favourable growth conditions.
Forecast of world coffee production 2022
The International Coffee Organization (ICO) forecasts that the world coffee market will have a deficit of 3.1 million bags compared to the demand in the crop year 2021 – 2022. The balance of supply and demand reversed mainly due to the adjustment. There is a significant increase in Venezuelan consumption, but the overall trend may contribute to the reduction in inventories, as consumption exceeds production in the coffee year 2021-2022.
- Global coffee production for the coffee year 2021-2022 is forecast by the ICO to be at 167.2 million bags, down 2.1% from 170.8 million bags in the crop year 2020-2021.
- One of the main factors driving this decline is the expected decrease in arabica production by 7.1%, to nearly 94 million bags. In comparison, robusta production is expected to increase by 5.1% to 73.2 million bags.
- In terms of production area, coffee production in Asia and Oceania is estimated to increase by 7.1%, from 48 million bags to 51.4 million bags in the 2021-2022 crop year.
- However, production in South America is expected to decrease by 7.6%, to 77.5 million bags from 83.8 million bags in the previous crop year. In addition, production in Central America and Mexico is also forecast to decrease by 3.5%, from 19.7 million bags to 19 million bags.
- Africa’s production is estimated to decline slightly by 0.3 per cent to nearly 19.3 million bags in the 2021-2022 crop year.
- Meanwhile, world coffee consumption is forecast to increase by 3.3% to 170.3 million bags in 2021-2022 from 164.9 million bags in the previous crop year.