ICO Raises Global Coffee Output Estimates for 2015/16

Global coffee output estimated at 148 million bags, up from 143.3 million bags

c1The International Coffee Organization (ICO) has raised its estimates for the 2015/16 crop, partly reflecting higher output from Colombia, but still predicts a global deficit for the current coffee year (October 2015-August 2016), as reported by Reuters on October 14th, 2016. ICO estimates global coffee output at 148 million bags (each bag = 60 kgs), up from a prior estimate of 143.3 million bags, and a 0.9% increase over 2014/15 production. While arabica production is predicted to rise 0.7% to 85.8 million bags, robusta is estimated up 1.3% to 62.2 million bags.

With global consumption revised slightly downwards to 151.3 million bags, the shortfall amounts to 3.3 million bags for 2015/16, the second consecutive deficit year.

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Colombia ended 2015/16 with total production of 14 million bags, its highest volume since 1992/93. Indonesia produced 11.5 million bags in 2015/16; however, Indonesia’s coffee crop for 2016/17 is likely to be affected by the adverse weather earlier in 2016. Brazil, the world largest coffee producer, produced an estimated 48.4 million bags, down 5.4% from the previous year as a drought in 2014 reduced robusta production. Top robusta producer Vietnam’s production is seen at 27.5 million bags, up 3.8% from the previous year. However, dry weather in early 2016 is seen likely to reduce output in the upcoming 2016/17 season.

ICO composite indicator rose in September

The coffee market inched up 5.5% in September 2016, driven by an increase in robusta prices and estimates of a deficit in future supply. The daily price of the ICO composite indicator rose modestly over the course of the month, increasing from 136.56 cents on September 1st, 2016, to 138.69 cents, and briefly touching a 19-month high of 141.69 cents. This brings the monthly average to 138.22 cents, 5.5% higher than August 2016, and the highest monthly average since February 2015.

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Robusta prices witnessed consistent rises during September 2016, 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 recorded increases of at least 5% compared to August 2016.

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Exports for coffee year October 2015 to August 2016

c5Total coffee exports in August 2016 were at 9.8 million bags, up 9.5% compared to 8.91 million in August 2015. Shipments from Colombia increased 16.7% following the resolution of the truckers strike. Vietnam’s output was also estimated 32.3% higher as farmers took advantage of higher prices. Exports from Brazil were 7.4% lower, but still relatively high on 2.7 million bags, while Indonesia’s exports plunged 28.4% compared to last year. As a result, total exports for the 11 months from October 2015 to August 2016 are estimated to decline 1% Y-o-Y to 102.8 million bags, with shipments of arabica up 3.4% and robusta down 7.7%.

In the 12 months ended August 31st, 2016, exports of arabica inched up to 70.96 million bags compared to 68.51 million bags last year, while robusta exports fell to 40.68 million bags compared to 44.45 million bags last year.c6

Although the coffee market ends 2015/16 in a deficit, stocks accumulated in 2012/13 and 2013/14 have allowed the market to remain well supplied as shown above. 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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