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Lower Brazil output to drag world coffee market into 2019-20 deficit

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World coffee production will return to a deficit this season, just, as a decline in arabica output more than offsets a third-successive increase in the robusta harvest, the International Coffee Organization said.

 

The intergovernmental group, in its first estimate for the world coffee balance sheet in 2019-20, as started last month, forecast a production deficit of 500,000 bags.

 

That would erode only part of the stockpile built by a 2018-19 a production surplus estimated at 3.66m bags - although that represented a sharp downgrade from a previous figure of 4.05m bags, with the ICO raisings its consumption estimate, while cutting its arabica output number.

 

For 2019-20, the organisation estimated world coffee output falling by 1.60m bags year on year to 167.4m bags, while demand extends its long-term increase, expanding by 2.56m bags to a record 167.9m bags.

 

Arabica vs robusta

Global arabica output was seen falling by 2.65m bags to a four-year low of 95.68m bags, thanks largely to 2019 being an “off” year in Brazil, the world’s top grower of the bean.

 

This would more than offset small increases expected to output from the likes of Colombia and Mexico, as well as Costa Rica which is expected to see 8.6% growth in output, to 1.55m bags.

 

Meanwhile, robusta production was seen growing by 1.05m bags to 71.72m bags, bolstered by a 16.8% recovery in Indonesian coffee output, with Vietnam’s total output seen holding firm at 31.2m bags.

 

Price differentials

The relatively ample robusta supply picture appears to have been reflected in prices, with values of the bean as measured by an ICO indicator averaging 68.63 cents a pound last month, down 2.8% from September, and at a nine-year low.

 

That widened the bean’s discount to arabica coffee, and in particular to values of Colombian mild beans, which posted marginal gains last month to lift their premium to 63.46 cents a pound.

 

Colombia saw a fall of 8.7% year on year to 1.01m bags in its September coffee exports, ICO data on Friday showed.

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