Coffee And Sugar Prices Will Remain Low

May 1, 2015

Coffee and sugar prices will remain low according to ABN AMRO, a leading retail and commercial bank active in Private Banking, Energy, Commodities & Transportation (ECT) and Clearing.

Average prices for coffee, cocoa and sugar trended downwards, ABN AMRO reports. Sugar was hardest hit, falling by 15 percent, while coffee and cocoa prices declined by 11 and 6 per cent respectively.

Coffee harvest better than expected, prices suffer

In the months ahead, ABN AMRO expects supply and demand factors to have a bigger impact on prices. Sugar production is expected to remain high.

As for coffee and cocoa, ABN AMRO expects prices to bottom out, as production will be at best barely enough to meet demand. Global coffee production is currently 3.5 per cent lower than a year ago, though higher than projected early this year.

Given anticipated global coffee consumption of 149 million sacks, ABN AMRO foresees short supply, which means the prices are unlikely to fall any further. Cocoa production, meanwhile, is expected to seriously lag previous years, with Ghana lowering its production forecast by 20 per cent.

Sugar price falls

In recent months, currency movements have been the main source of heavy pressure on prices of wheat, sugar and coffee, ABN AMRO believes. This has led the bank to downwardly adjust its price forecasts for these commodities. For cocoa, on the other hand, no major price shifts are expected.

Cereal production is unlikely to reach new highs in the months ahead, but 2015-2016 harvests will still be at elevated levels. ABN AMRO therefore expects cereal prices to remain at their current lows for several months to come.