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The International Coffee Organization (ICO) says the coffee market settled up by 5.5 per cent in September, mostly driven by a steady increase in Robusta prices supported by concerns over future supply. This brought coffee year 2015/16 to an end, with the ICO revising its production estimate up, to 148 million bags. With world consumption revised slightly lower to 151.3 million bags, this gives a global deficit of 3.3 million bags. The revision is part of an in-depth review of the statistical data published by the ICO, following the discussions during the 117th Session of the Council held in London in September 2016.

The daily price of the ICO composite indicator rose modestly over the course of the month, increasing from 136.56 cents on 1 September to 138.69 cents, despite briefly touching a 19 month high of 141.69 cents. This brings the monthly average to 138.22 cents, 5.5 per cent higher than August and the highest monthly average since February 2015. The Robusta market saw the most consistent increases during September, with the group indicator rising from a low of 92.79 at the beginning of the month to nearly 100 cents by the end. The three Arabica groups were less steady, but still recorded strong increases of at least 5 per cent compared to the previous month.

Total exports in August came to 9.8 million bags, up 9.5 per cent on the same month last year. Shipments from Colombia increased by 16.7 per cent following the resolution of the truckers strike, with Vietnam also estimated 32.3 per cent higher as farmers take advantage of higher prices. Exports from Brazil were 7.4 per cent lower but still relatively high on 2.7 million bags, while Indonesia continued to register lower exports, down 28.4 per cent compared to last year. As a result, total exports for the first eleven months of the coffee year (October to August) are estimated 1 per cent lower than the same period last year on 102.8 million bags, with shipments of Arabica up 3.4 per cent and Robusta down 7.7 per cent.

The ICO has also revised production and consumption numbers for the last four crop years (2012/13 to 2015/16). This is part of an ongoing review of ICO statistics, which will be continued over the course of the next year. Production in 2015/16 has been revised up to 148 million bags, a 0.9 per cent increase on 2014/15. Arabica production is up by 0.7 per cent to 85.8 million bags, while Robustas are estimated up 1.3 per cent to 62.2 million bags.

In Brazil, production for 2015/16 is estimated at 48.4 million bags, down 5.3 per cent compared to the previous year as the drought in 2014 reduced output, particularly of Robusta. Nevertheless, Brazil recorded a record export performance of 36.9 million bags from April 2015 to March 2016, which given a domestic consumption of 20.5 million bags suggests a significant stock drawdown of nearly 9 million bags. Production in Vietnam was maintained at 27.5 million bags, up 3.8 per cent on last year, but dry weather at the beginning of this year is likely to reduce output in 2016/17. Colombia has ended 2015/16 with a total production of 14 million bags, its highest volume since 1992/93, although the potential development of La Niña could affect the 2016/17 crop. 2015/16 was also a good year for Indonesian production, estimated at 11.5 million bags, although again the outlook for 2016/17 is less positive following adverse weather conditions earlier this year.

As a result, 2015/16 is seen in deficit for the second consecutive year, with consumption exceeding production by 3.3 million bags. However, the market has remained well supplied by stocks accumulated during surplus years in 2012/13 and 2013/14. Stocks in importing countries reached 24.2 million bags at the end of June 2016, their highest level since September 2009, which will give a buffer against any short-term supply concerns.

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