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Category: Forex News, News

Beverage prices ease amid signs of improved supply conditions

This blog post is part of a special series based on the April 2024 Commodity Markets Outlook, a flagship report published by the World Bank. This series features concise summaries of commodity-specific sections extracted from the report. Explore the full report here.

The World Bank’s beverage price index eased in early to mid-May after reaching a record high in April 2024. This year, the index is expected to average over 20 percent higher than in 2023, with a projected decrease in 2025 as new supplies enter the market. However, the emerging La Niña could cause weather-related disruptions, posing risks to this forecast.

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After reaching record highs in April, coffee prices eased in May. Both Arabica and Robusta prices declined following significant weather-related supply constraints in the first quarter of 2024, particularly impacting Robusta. The global coffee market is expected to see some relief with an anticipated addition of nearly 7 million bags this season, mainly from key Arabica producers such as Brazil and Colombia. However, the Robusta market will continue to face supply challenges, particularly in Vietnam—the world’s dominant Robusta supplier—where hot and dry conditions could impair yields. On the demand side, consumption is projected to increase by more than 1 percent from last season, reaching a record 170.5 million bags during the ongoing 2023-24 season. Arabica prices are expected to rise marginally in 2024 before easing in 2025. In contrast, Robusta prices are projected to average more than 40 percent higher in 2024 compared to 2023 before also easing in 2025. Risks to this forecast, especially for 2025, include the emerging La Niña, which could impact production in both South America and East Asia.


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