Coffee – the darling of 2021, when it was among the top performing agricultural commodities – suffered a dismal 2022.

Arabica coffee was the biggest loser among major ags last year, with a 26% decline, while robusta coffee fared only marginally better.

Pressure was engendered by improved, if not fantastic, Brazilian production and expectations of a further increase in 2023 – despite it being, on paper, an “off” year for output. Meanwhile, demand hopes took a dent from the world economic slowdown.

But have investors removed too much risk premium? Has last year’s big fall set up prices for a recovery in 2023? Leading commentators give their assessments below.


Fitch Solutions

For 2023, we highlight that our average arabica coffee price forecast [190 cents a pound] is now subject to weightier downside risks than previously as our growth outlook for several major coffee consuming markets, such as the EU, has weakened.

We highlight too that arabica coffee prices, despite recent losses, remain elevated in recent historical terms – prices averaged 111 cents a pound over the three-year period between 2018 and 2020, while current prices are similar to the average 2021 price of 170 cents a pound.

We note too that coffee prices across the complex have fallen in recent months – the International Coffee Organisation (ICO) Composite Indicator Price fell by 10.6% m-o-m in October, with average prices for all coffee groups (Brazilian milds, Colombian milds, other milds, and robusta decreasing through the month.


Goldman Sachs

In coffee, improved Brazilian harvests finally led to the capitulation of the coffee market, ending the round trip that started in July 2021 when unexpected frost damaged Brazil’s coffee crop.

With Brazilian exports expected to continue to rise into 2023 and coffee demand slowing, we do not expect coffee to revisit the highs without a significant weather event, such as another frost.

While Ice inventories remain near multi-year lows, they have become an increasingly distorted signal of tightness.

Nevertheless, with coffee oversold in the short run, we expect near term upside into 2023, before deflation resumes for the remainder of 2023. We roll our forecasts to 190, 175, and 155 cents a pound for the next three, six and 12 months.



Our very initial estimate is for a global surplus of around 4m bags in the 2023-24 crop year, following a very small deficit in 2022-23.

Brazil arabica production is expected to see a decent recovery next season. A good return of the rainy weather has led to a widespread wave of flowering across the Brazilian arabica belt.

Colombia is expected to climb from a very preliminary estimate of 12.1m bags in 2022-23 to 13.1m bags in 2023-24, benefiting from high prices and a weak currency.

Vietnam might also see a slight recovery, but as coffee farmers there are not benefitting as much from high prices (robusta prices did not rise as high as arabica prices)… we only expect a return to 2021-22 levels of around 30m bags.

On the demand side we expect to see growth of 1.5% in 2022-23, well below the historical average of 2.3%. Any growth will, to a great extent, depend on how severe any potential recession is and whether natural gas will be rationed in the EU, which could disrupt roasting operations.

The higher expected availability from Brazil will allow arabica to claw back a higher share of global demand.

Rabobank forecasts Ice arabica futures averaging 163 cents a pound in the fourth quarter of 2023, on a second contract basis.

The second-in May contract on Tuesday stood at 169.90 cent a pound.


GrainPriceNews view

Arabica coffee futures were the worst performer among major agricultural commodities in 2022, tumbling by 26% on a front contract basis. Robusta ones didn’t fare much better, diving by 25%.

Even so, prices remain relatively high by historical standards, after a buoyant 2021, during which arabica futures jumped by 76%, and robusta ones by 81%, strengthened by factors such as frost and drought damage to Brazilian plantations.

So prices still have scope to suffer further weakness, given hopes of a strong Brazilian harvest next year, following a strong blossoming period, and with demand kept in check by the world economic downturn.

However, to assume a strong Brazilian harvest may be premature, given reports, from observers such as analyst Maja Wallengren, that prospects for 2023 output are not so optimistic after all, with robusta production viewed particularly at peril.

It is also worth keeping an eye on the currency markets. Brazil’s real has strengthened a little against the dollar over the past couple of years, supporting the value, in dollar terms, of assets in which the South American country is a big player.