A Coffee Price Forecast For 2019

We see several signs of a very aggressive coffee (COFFEE) price rally in 2019. Coffee might even qualify as potentially one of the top 3 investing opportunities of 2019 which is one of our key themes. Our most bullish coffee price forecast for 2019 is $2 which is double of the price at the time of writing.

Previously we wrote about several other forecasts for 2019 in the commodities space, think of our gold forecastsilver forecastcopper forecastpalladium forecastsugar price forecast. Essentially, our focus has been on the larger commodities, even primarily metals. So our coffee price forecast 2019 is just the 2nd in the category of soft commodities.

In order to create a comprehensive picture as input for our coffee price forecast 2019 we do a 360° view of supply/demand fundamentals, intermarket influencing factors like currencies, the futures market positioning, and obviously the long term coffee price chart!

Coffee Price Forecast 2019: Supply vs. demand

First, as part of our coffee price forecast 2019 we look at supply/demand situation.

The supply/demand picture in the coffee market is pretty straightforward: rigid supply situation combined with an inelastic demand. In other words, it is pretty tough to increase/decrease supply and consumers will not drink more/less if the coffee price changes. It makes for a simple equation.

As per this report Coffee World Markets and Trade published in December the world coffee production for 2018/19 is forecast at a record 174.5 million bags, up 15.6 million from the previous year.

Brazil is forecast to account for nearly all the gain as its Arabica crop enters the on-year of the biennial production cycle and Robusta continues to rebound. Record world exports are forecast, largely on the strength of Brazil. Although world consumption is forecast to rise by a modest 3.3 million bags to a record 163.6 million, ending stocks are expected to rebound sharply by 7.1 million bags to 37.1 million. Against this backdrop, coffee prices as measured by the International Coffee Organization (ICO) composite price index have dropped over 10 percent in the last year.

Moreover, as we find more supply/demand details on FoodNavigator.com which confirms that the coffee market is in crisis. That’s because international coffee prices are less than 45% in real terms than in 2011.

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