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Africa: Coffee, Tea Prices to Fall This Year – World Bank

Kampala — Coffee, tea and cocoa prices could fall by more than six per cent this year due to greater supply, a report says.

The World Bank report, however, also projects that agricultural raw materials production is expected to rise by four per cent.

According to the World Bank’s Commodity Markets Outlook, returns from the three beverages are forecast to decline this year ‘due to greater-than-expected supply.’

Coffee prices have been rising over the past year but started to fall late last month.

Surplus predicted

Traders are now predicting that coffee will end up in surplus this year and not in deficit as had been expected previously.

The report provides detailed market analysis for major commodity groups, including energy, metals, agriculture, precious metals, and fertilisers. The World Bank is also forecasting higher prices for industrial commodities, principally energy and metals in 2017 and next year.

The Commodity Markets Outlook predicts crude oil prices this year will be around $55 per barrel, increasing to an average of $60 per barrel next year. Rising oil prices, supported by production cutbacks by Organisation of the Petroleum Exporting Countries (Opec) and non-Opec states “will allow markets to gradually rebalance,” the report says.

However, these oil price forecasts are subject to downside risks should the rebound in the US shale oil industry be greater than expected.

Energy commodities

Prices for energy commodities, which also include natural gas and coal, are projected to jump 26 per cent this year and 8 per cent in 2018.

In line with oil price forecasts, natural gas is anticipated to gain 15 per cent this year, led by a jump in US prices.

Coal is seen climbing 6 per cent in 2017, due to earlier supply restrictions in China, which consumes half the world’s coal output.

With agencies

Source: The Monitor

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