COFFEE Analysis: Expected drop in global demand bearish for coffee price

April 22, 2020

By IFCMarkets

Expected drop in global demand bearish for coffee price

The International Coffee Organization (ICO) estimates world coffee consumption in 2019/20 at 169.34 million bags, 0.7%, higher than in 2018/19. And the trade statistics show the global coffee export rose in February over year compared with January exports. Thus world coffee exports amounted to 11.11 million bags in February 2020 compared with 10.83 million in February 2019, when exports in January 2020 amounted to 10.29 million bags compared with 11.14 million in January 2019. This indicates a rising demand for coffee and an upside risk for coffee prices. At the same time ICO estimates that a 1 percentage point drop in GDP growth results in a reduction in the growth of global demand for coffee of 0.95 percentage points. The estimate doesn’t include the impact of social distancing measures on out-of-home consumption when large parts of the hospitality industry are under lockdown and workplaces are closed. And the International Monetary Fund forecast a 3% drop in global growth in 2020, which represents a downgrade of 6.3 percentage points from January 2020. An expected drop in global demand is bearish for coffee.

Indicator VALUE Signal
RSI Neutral
MACD Sell
Donchian Channel Sell
MA(200) Buy
Fractals Sell
Parabolic SAR Sell

 

Summary of technical analysis

Order Sell
Buy stop Below 110.98
Stop loss Above 122.2

Market Analysis provided by IFCMarkets