- Surge may keep roasters from rushing to buy supplies
- Currency depreciations increase grower incentives to sell
Stockpiles of unroasted green coffee in the U.S., the world’s top consumer, surged to a 12-year high in August, signaling ample supplies as Colombia and Central American countries gear up to start collecting the crop.
Inventory rose 1.4 percent from a year earlier to 6.123 million bags, the most since August 2003, according to data from the New York-based Green Coffee Association Inc. Tuesday. That was the fifth straight monthly increase, the longest stretch since July 2014. A bag weighs 60 kilograms, or 132 pounds.
Arabica-coffee futures slumped 29 percent this year on ICE Futures U.S. in New York amid improving production in Brazil, the top supplier, and in Colombia, the second-largest producer of the variety favored by Starbucks Corp. Turmoil in financial markets and concerns about growth in China have sparked depreciation across emerging markets, including Brazil and Colombia, boosting incentives for producers to sell raw materials priced in the greenback.
“There’s more coffee coming in than what many people had thought,” Hernando de la Roche, senior vice president for INTL FCStone in Miami, said in a telephone interview. “The currency depreciation has accelerated the flows of coffee” and this “tells us that roasters will not be in a rush to buy. It will probably put pressure on prices.”
The inventory data included robusta beans, widely used to make instant drinks. Vietnam, the largest supplier of the type, has also seen its currency weakened.
Recent ample rains in Brazil have also boosted the outlook for the nation’s crop next year. Colombian output may top a U.S. government estimate in the season that starts Oct. 1 as yields gain after old trees were replaced with new ones, a growers’ group said last week.
Colombia and Central American countries will start gathering the 2015-16 crop in the fourth quarter.