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SUPPLY DEFICIT COULD BE SMALLER BUT COFFEE PRICE REMAINS IN THE DOLDRUMS

SUPPLY DEFICIT COULD BE SMALLER BUT COFFEE PRICE REMAINS IN THE DOLDRUMS



Brokerage firm Marex Spectron has reduced its estimate of the supply deficit on the global coffee market in 2017/18 to 2.2 million bags. Previously, a deficit of twice that size had been anticipated.

Commerzbank Research said global coffee production is set to total 155.3 million bags, which puts it nearly three million bags higher than previously thought.

Part of the upward revision is due to Vietnam, where the coffee crop is set to achieve or nearly achieve a record level at 29 million bags.

According to the International Coffee Organization, the 2016/17 Vietnamese coffee crop totalled 25.5 million bags. Vietnam is the world’s largest producer of Robusta coffee.

Marex Spectron also envisages a higher crop than previously expected in Honduras, where Arabica coffee is grown.

Global coffee demand is set to total 157.6 million bags, which constitutes an upward revision of nearly one million bags as compared with the previous estimate.

Moreover, said Commerzbank, Marex Spectron says Brazilian coffee exports this year are ‘sluggish’ and there is tightness in exportable quality coffee.

“That said, Marex Spectron expects to see a higher coffee crop again in Brazil in 2018/19,” said Commerzbank, noting that the coffee price already appears to reflect this outlook, as Arabica coffee is trading close to a four-month low at 124 US cents per pound.

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