A farmer plucks ripe coffee berries from his farm. FILE PHOTO | BENSON MOMANYI | NMG
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.
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. 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.
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