World coffee stocks will fall next season to their lowest in
six years – and for even longer in major exporting countries - sapped by record
demand at a time of only marginally rising output.
The US Department of Agriculture, in its first global coffee
estimates for 2017-18, forecast stocks closing the season at 34.0m bags, a drop
of 1.1m bags year on year, and the lowest since the end of 2011-12.
World demand was forecast rising by 1.1m bags year on year,
to an all-time high of 157.5m bags, with expansion expected for a range of producers
and of importers, including top consumer the European Union, which will drink
the equivalent of 44.8m bags of beans next season.
However, production was expected to rise only marginally, to
159.3m bags, as a boost from recoveries in robusta output from droughts is
offset by a decline in Brazil's arabica crop, which sees alternate years of
higher and lower production.
'Water deficit still important'
Indeed, the Brazilian arabica harvest will drop by 5.1m bags
to 40.5m bags, thanks to the "off-year" effect, and despite "excellent
vegetative development and vigour" in plantations in top growing state Minas
However, the country's robusta crop will recover somewhat,
by 1.1m bags to 11.6m bags, thanks to a reduction, but not elimination, of
drought worries in Espirito Santo, the top producing state for the variety.
"The water deficit is still an important issue for the state
and several restrictions such as limits on irrigation have been enforced,
reducing production potential nearly 40%," the USDA said.
Meanwhile, robusta output will also recover in Vietnam, by
1.9m bags to 28.6m bags, "as sufficient rains fell between January and March, leading
to good flowering and fruit-set
"Also, farmers benefited from the previous year's higher
prices, allowing them to increase expenditures for fertilizers and other inputs
to raise yields."
Robusta production will also rise by 300,000 bags to 10.9m
bags in Indonesia, and rise in India too, thanks to improved weather.
Meanwhile, in Central America, production of arabica beans
will rise by 1.0m bags to 18.1m bags, although the USDA also highlighted the varying
fortunes within the region, which "continues to struggle with the coffee rust
outbreak that first lowered output five years ago.
"Production has mostly recovered in Honduras, Mexico, and Nicaragua
during this period but remains depressed in El Salvador, Guatemala, and Costa
World exports of beans were seen as "steady" despite the rising
output, with the USDA data also highlighting the extent of stockpiling
undertaken in consuming regions.
Indeed, of the 34.0m bags of global inventories at the close
of 2011-12, 67.9% were seen as held in the big three importers of the European
Union, Japan and the US.
That is up 2.3 points year on year, and compares with a low
of 50.5% in 2014-15.
The split of inventories between exporting and importing
nations is viewed as an indicator of price potential, in indicating the level
of urgency, and willingness to pay up, likely held by importers.
* The USDA uses in the main an October-to-September crop year for its calculations, but uses a different calendar for a few countries, including a July-to-June year for Brazil.