Beverage commodities prices during the COVID-19 pandemic

|

This page in:

The World Bank's Beverage Price Index started to uptick in April-May, following declines earlier the year due to weakening cocoa and tea prices. The index is expected to average slightly lower in 2020 before rebounding in 2021. 

Coffee
Arabica and Robusta prices diverged in recent months. Weather disruptions (heavy rains) and pandemic-related labor restrictions in Brazil—the world's largest coffee supplier and dominant Arabica producer—have put upward pressure on prices.  Although Arabica prices declined in May, they remain higher compared to last year's average. They are expected to rise further in 2020 before stabilizing in 2021.

In contrast, Robusta prices have fallen 9% this year (compared to 2019's average price). The weakness reflects a pickup in exports from Vietnam, the world's second largest coffee supplier. Robusta prices are expected to decline by more than 7% in 2020, followed by a modest recovery in 2021.
 

Cocoa
Cocoa prices stabilized in April-May, following headwinds in March due to COVID-19 demand concerns. A large crop in Côte d'Ivoire—the world's top cocoa supplier—created additional downward pressure. Although global cocoa production in 2020 is expected to grow at 2%, demand is expected to shrink at a higher rate. Thus, a decline in prices for 2020 is anticipated before some modest gains in 2021.
 

Tea
Tea prices, especially at the Kolkata and Colombo auctions, increased recently, while prices at the Mombasa auction remain subdued. Kolkata and Mombasa auctions reached 13- and 6-year lows, respectively, in response to ample supplies in Kenya, disruptions of tea shipments to various importing countries, and disappointing demand (in part due to the lockdown in India). Tea prices (auction average) are expected to drop 10% in 2020, mostly due to weak demand, before experiencing a relatively softer recovery in 2021. 

Authors

John Baffes

Senior Agriculture Economist, Development Economics Prospects Group

Join the Conversation