The coffee bean market has bifurcated since coronavirus lockdowns forced a global shift in consumer behavior this year.
Coffee futures linked to arabica, a softer, sweeter variety that is largely produced in Latin America and is popular in cafes and restaurants, have fallen almost 9% in New York trading in 2020.
Robusta futures, which track the beans used largely in freeze-dried coffees or in pods for kitchen-top espresso machines, are down less than 3% in London trading. Those stronger tasting beans are commonly grown in Vietnam.
The pandemic has changed where and how most people in the West consume coffee, with restaurants and cafes shut down because of lockdown measures, complicating efforts to accurately gauge demand, according to analysts. Meanwhile, the coffee market is poised for a glut in supply, in part due to bountiful harvests in Brazil, the world’s largest producer of coffee. That combination is threatening to derail any recovery in coffee prices.
“The high supply, which is meeting with sluggish demand, is making a price recovery after the price decline of recent months more difficult,” said Michaela Helbing-Kuhl, agricultural commodities analyst at Commerzbank.
Coffee consumption in the marketing year ending in September is likely to fall for the first time since 2011, according to projections by the Agriculture Department. Next year, coffee consumption could edge up a tepid 1.5% to 166.3 million bags, it said.
Demand for coffee has weakened more in emerging markets such as Brazil than in developed nations like the U.S., analysts said. The change in consumption habits world-wide is without precedent and it is hard to tell if people working from home and drinking coffee in the house has increased consumption enough to offset the decline in cafes and restaurants.
Gauging current demand is difficult even in normal times, said Steve Pollard, a coffee analyst at brokerage Marex Spectron.
Data on supermarket sales can be used to gauge at-home consumption while the earnings of large coffee chains can give an indication of out-of-home demand, but neither captures the full picture, Mr. Pollard said. Many of the largest coffee-consuming nations such as Brazil gather only some data on coffee drinking, while others have no data at all. Broad gauges including exports and imports can offer indicators on shifts in demand over time.
“The feeling we get from talking to people in the market is that the fall in out-of-home consumption is larger than the rise in at-home consumption,” said José Sette, executive director of the International Coffee Organization. “So the rise in at-home consumption is unlikely to compensate fully, but by exactly how much is still a matter of speculation.”
The supply picture is clearer: Next year’s harvest of coffee beans is expected to reach its highest ever, with the USDA forecasting production of 176.1 million bags.
Traders’ worries that supply could be disrupted because of the pandemic—especially if farms were short of laborers or if border controls and port lockdowns curtailed transportation—have largely failed to materialize.
The highly mechanized farms of Brazil in particular managed to avoid any disruptions, putting the country on track for a record harvest in the marketing season that starts in October. The country’s production will probably account for just under 68 million bags, making it Brazil’s largest-ever harvest.
Supply of arabica beans, which account for roughly 60% of the world’s traded coffee, could still be at risk if the smaller-scale farms of Colombia and Costa Rica have difficulty finding the skilled migrant laborers they rely on, said Priscilla Daniel, senior coffee trader at London-based DR Wakefield. Coffee consumed at home is typically a blend of robusta and arabica.
“If you have a less-experienced picker, and then fewer pickers per square meter, you will miss the perfect time to pick, and the quality might not be as good,” Mrs. Daniel said. Lower-quality beans that don’t meet export standards can mean lower volumes in international markets.
A cafe in Salou, Spain, on July 27.
Photo: Angel Garcia/Bloomberg NewsThe slump in arabica coffee futures this year makes them among the worst-performing major commodities, along with U.S. oil prices, which have dropped 35%. In contrast, gold prices have risen over 30% and copper has mostly held its value this year, ticking up 3.5%.
Coffee prices could get a boost if government stimulus measures drive up consumer spending and encourage people to visit cafes and restaurants, analysts said. But the change in coffee habits may prove permanent.
“In the long term I am very confident about consumers’ desire for coffee, but what might the longer-term changes be if, for example, we move to a world where people work at home more?” ICO’s Mr. Sette said.
Write to Will Horner at William.Horner@wsj.com
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