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Beverage commodity prices to stabilize amid stronger demand and ample supplies

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Following sizeable gains in 2020Q3, beverage commodity prices weakened recently on news of larger-then-expected production for the current season. Following a projected increase of nearly 7% this year, the World Bank’s Beverage Price Index is expected to post a moderate gain in 2021, according to the October 2020 edition of World Bank’s Commodity Markets Outlook.

Arabica and Robusta coffee prices followed similar paths during the past year. Following declines earlier in the year as a result of the pandemic, both Arabica and Robusta prices gain momentum during 2020Q3 as consumption prospects improved.  However, the momentum was halted following news that global production is expected to gain more than 5% in 2020-21 due to a larger-then-expected Brazilian crop. The 2020-21 global coffee output will be more than double the 2005-20 average rate of increase of 3.4 million bags. Arabica prices are expected to stabilize in 2021, following an estimated gain of 15% in 2020, while Robusta prices are expected to gain 3% in 2021, after a projected decline of 7% in 2020. 

Coffee Prices

coffee prices


Coffee production, year-on-year change

coffee production, annual change

Cocoa prices gain momentum. After declining due to concerns about the pandemic’s impact on cocoa demand earlier in the year, cocoa prices stabilized during 2020Q3. Cocoa futures prices, however, surged in late November (especially the December contract) when key confectionary manufacturers decided to source cocoa beans through futures markets instead of physical markets. The move followed the decision by two major cocoa exporters—Ghana and Ivory Coast—to place a $400-per-ton premium on cocoa sales—known as the Living Income Differential. Despite the recent price spike, the global cocoa market appears to be well-supplied. Production for the current crop season is projected to be 5% higher than 2019-20 (twice the long-term average growth rate), led by output increases in Côte d’Ivoire (5%) and Ghana (7%).  As cocoa demand picks up, prices are expected to gain 2% in 2021, following a projected marginal increase in 2020.


Cocoa production, year-on-year change

cocoa production, annual change

Tea prices followed diverse trajectories during the pandemic. Prices at the Kolkata (India) auction gained near 45% in 2020Q3 compared to a year ago, as Indian tea production declined sharply during the lockdown, especially in Assam and Darjeeling, India’s important tea producing regions.  Prices have dropped substantially since then as Indian tea supplies recover. Prices at the Mombasa (Kenya) auction declined 2% in 2020Q3 (q/q), or 10% compared to a year ago, on ample supplies due to favorable weather and weak demand. The impact of COVID-19 on tea plucking and transportation in most East Africa tea producing countries, especially Kenya, was also subdued. Prices at the Colombo (Sri Lanka) auction eased in 2020Q3, but excessive rains and reduced mobility (due to the lockdown during the peak harvest) have kept prices 15% higher than a year ago. As Indian tea supplies recover, tea prices (three-auction average) are expected to remain broadly stable in 2021, following a 6% projected rise in 2020. 



World’s top beverage producers

Top beverage producers



John Baffes

Senior Agriculture Economist, Development Economics Prospects Group

Jinxin Wu

Research Analyst, Prospects Group

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