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ICO slashes 3.8m bags from world coffee supplies on increased demand ideas

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The International Coffee Organization, revising estimates over the past three seasons, slashed 3.8m bags from its estimate of world coffee supplies – even as it made a, small, upgrade to its estimate for 2017-18 production.


The intergovernmental group, in a monthly briefing, ditched ideas of a 1.18m-bag world coffee output surplus this season, as it had previously expected - forecasting instead a 22,000-bag deficit.


For 2016-17, the ICO made an even bigger revision - cutting its estimate for an output surplus by 2.32m bags to 312,000 bags.


With a small increase made to the estimate for the coffee output shortfall in 2015-16, the revisions imply that stocks as will close this season 3.8m bags smaller than had been previously estimated.


Demand upgrades


The revisions came even as the organisation nudged higher by 150,000 bags to 158.93m bags its forecast for world coffee output in 2017-18, reflecting an improved estimate for Asian production.


However, it upgraded its forecast for global consumption this season by considerably more – by 996,000 bags to 158.95m bags.


And estimates for coffee drinking in previous years were raised too - by 2.32m bags for last season and 287,000 bags for 2015-16.


Although the ICO did not explain the reasoning for the revisions, they reflected largely increased ideas of consumption in importing countries, and by region notably in Africa and North America.


Growth dynamics


In fact, the estimate for coffee demand growth in 2017-18 was downgraded, to 1.0% from 1.6%, with cuts to expectations for expansion in all regions, but in particular emerging market regions such as Latin America and Asia.


However, the revisions lifted the average pace of world consumption growth over the past three seasons by 0.3 points, to a little under 1.6% a year.


Europe remains by far the biggest consuming region, responsible for 51.9m bags a year, ahead of Asia and Oceania, responsible for using 35.3m bags.


‘Excessive rains’


On production, the ICO stood by its estimates for 2017-18 output from major producing countries, at 51.5m bags for Brazil, 28.5m bags for Vietnam, 14m bags for Colombia and 10.8m bags for Indonesia.


The forecast for a 14m-bag Colombian harvest, down 4.3% year on year, came despite data earlier this week from growers’ group Fedecafe showing production last month at 1.13m bags, a drop of 11.3%.


Indeed, the ICO forecast implies some catch-up over the rest of 2017-18, with Colombian production in the first four months of the season, which started in October, down 10.4% year on year at 5.06m bags.


The “excessive rains” blamed for the recent production declines “may improve yields for the mitaca crop” harvested later in the season, the ICO said.

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