Sept. 28 (Bloomberg) -- Robusta coffee demand will exceed supplies in the season starting Oct. 1 in most countries, with global usage increasing and a smaller crop in Vietnam, the world’s biggest grower, according to Amtrada Holding BV.
Production of robusta beans, used in instant coffee and espresso, will lag behind consumption by 300,000 bags of 60 kilograms (132 pounds), according to the Amsterdam-based holdings company, which owns coffee trader Nedcoffee BV. That follows a balanced season in 2011-12, Hans Hendriksen, managing director of Amtrada, said in Geneva today.
Global consumption of the variety will rise 3 percent in the new season, at a faster rate than the growth in arabica, the kind favored by companies such as Starbucks Corp. The crop in Vietnam will decline to about 1.3 million metric tons (21.7 million bags) in 2012-13 from almost 1.6 million tons in 2011-12, he said.
“If you look at the expectation for robusta in general, and you take Vietnam’s crop below last year’s, Indonesia a normal one, India a normal one and Uganda a normal one, where is the robusta going to come from? So it’s going to be tight,” Hendriksen said.
Robusta coffee has climbed 19 percent so far this year as demand increased in emerging markets and producing countries. Some roasters in traditional consuming areas in Europe and in the U.S. also increased their usage of the cheaper beans after the arabica variety soared to a 14-year high last year.
“There is new consumption, which is called the 3-in-1 products, in which you see coffee, sugar and milk together in new markets and it’s based on soluble coffee made out of robusta,” Hendriksen said. “There is an increase in consumption in other markets, in Europe and in the U.S. as well and it started with pricing.”
Roasters that increased usage of robusta are unlikely to switch back to arabica even after the price difference between the two kinds fell, he said. Arabica coffee was 74.1611 cents a pound more expensive than robusta beans, down 49 percent this year, data compiled by Bloomberg shows. Robusta demand may have increased by 5 million bags in the current season at the expense of arabica, Macquarie Group estimated on Sept. 6.
“In European markets and maybe in the U.S. as well, the consumer downgraded and is consuming lower-priced coffees, which therefore increases the demand for robusta,” Hendriksen said. “Why would people change back to arabica if it’s already accepted quality? I don’t see it.”
Output in Vietnam will fall after a record crop in 2011-12 as rains induced early flowering of trees, meaning cherries that contain the beans will not mature uniformly, he said. Amtrada, which owns a coffee processing factory in the country, plans to expand its operations there, he said, declining to give more details. The company handles about 130,000 tons of robusta beans each year, he said.
The global cocoa market will see a “small” shortage in the 2012-13 season that also starts Oct. 1, with the crop in top grower Ivory Coast “slightly” smaller than last year’s, according to Amtrada, which also owns Dutch cocoa trader Continaf BV. Dry weather in July and August didn’t damage the crop, he said. The cocoa season is expected to start on time in Ivory Coast, he said.
To contact the reporter on this story: Isis Almeida in London at firstname.lastname@example.org
To contact the editor responsible for this story: Sharon Lindores at email@example.com