MSC Cargo
Header ad
Breaking News
  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

  • MSC, YOUR PARTNER THROUGH COCOA'S JOURNEY

ICO ENVISAGES DEFICIT IN COFFEE MARKET IN 2019/2020

ICO ENVISAGES DEFICIT IN COFFEE MARKET IN 2019/2020



The International Coffee Organization now officially shares the widespread expectation that the coffee market will slide into deficit in the 2019/20 season.

This is mainly due to lower Arabica production worldwide that cannot be offset by the expected rise in Robusta coffee.

At the same time, demand is continuing to grow, albeit by only 1.5 per cent per annum due to the slowdown in global economic growth.

The ICO expects global coffee production to fall 500,000 bags short of demand. Stocks are thus likely to decline slightly, though this will not give rise to any tightness given the fact that a surplus of 3.7 million bags is envisaged for the 2018/19 season that has just ended. Production already exceeded demand the year before.

As Commerzbank Research noted, two years of surplus generated massive pressure on prices, which fell to a 14-year low (Arabica) and a 9-year low (Robusta) in 2019.

“The main reason for the deficit now anticipated in 2019/20 is lower production in Brazil,” said Commerzbank. “2019/20 is a low-yield year in the two-year cycle for Arabica coffee there. Harvesting is already complete.”

The Brazilian forecasting agency Conab envisages a 27 per cent slump in Arabica coffee to 34.5 million bags, though Robusta production has reportedly increased slightly to 14.5 million bags. According to the ICO, it is also set to rise significantly in Indonesia.

The ICO also expects Vietnam, the largest Robusta-growing country, to produce another very high crop in 2019/20, at more than 31 million bags. As a result, the discount on Robusta coffee vis-à-vis Arabica has widened again in recent months.

Related posts

Leave a Reply

Your email address will not be published. Required fields are marked *

  • Sign up
Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.
We do not share your personal details with anyone.