The concerns over the drawdown in Brazilian coffee stocks is
more than a local issue, the International Coffee Organization said, warning
that world inventories are in a "relatively vulnerable position" over coping
with the shortfall.
The intergovernmental group echoed cautions from coffee expert Carlos Brando and the state trade centre for Minas Gerais, Brazil's top
coffee growing state, over the depletion of the country's coffee inventories in
store thanks to this year's drought-hit harvest.
While Conab, the official Brazilian crop bureau, has
estimated private inventories of coffee in Brazil at 15.2m bags, as of the end
of March, "given the lower crop expected…. It is likely that much of these
stocks will be necessary to keep the market supplied".
Mr Brando last week highlighted that production expected at
roughly 45m bags would, alone, be well short of the 21m bags needed to cover
domestic consumption plus the needs of bean exports and the soluble coffee
industry, pegged by some commentators at well over 30m bags.
Brazilian exports of Brazilian natural beans, the most
widely-produced arabica type, rose 9% in the first nine months of 2013-14, to
June, a record beaten only once before, three years ago.
However, the ICO also underlined that smaller world stocks "also
be kept in mind", saying that world inventories have fallen to the equivalent
of 3.4 months of use, from more than 8 months of consumption a decade ago.
"This levels the market in a relatively vulnerable position,
with global demand likely to exceed supply in the near future," the group said.
In fact, production in 2013-14, on its estimates, fell
600,000 bags short of consumption for calendar 2013, and the organisation was
aware of forecasts from many analysts of a further shortfall, ICO economist Thomas
Copple told Agrimoney.com.
"Some of this demand can be met by stocks, but this
situation offers significant potential for other origins to meet the shortfall,"
the ICO said.
The organisation highlighted recovering output in Colombia,
the second-ranked arabica coffee producer after Brazil, and from where exports
have jumped 22% to 9.2m bags in the October-to-June period.
But, in robusta coffee, shipments from Indonesia "dropped
dramatically" to 4.4m bags, from 8.3m bags in the same period of 2012-13.
The drop in Indonesian shipments is "raising concerns over
the size of the current 2014-15 crop", harvesting of which began in April, the
"Moreover, the continued increase in domestic consumption in
Indonesia is likely to put further pressure on supply availability."