Coffee Deficit Estimate Cut by Volcafe as Production Increases

  • Trader raises output forecasts for India, Uganda in 2015-16
  • `More conservative' demand outlook seen in emerging economies

The shortfall in coffee production for the current crop year will be less than previously estimated because of lower demand in emerging economies and an improvement in supply from some countries, according to Swiss trader Volcafe.

Output will fall short of demand by 2.3 million bags in the 2015-16 season, which started in October in most countries, Volcafe said in an e-mailed report. That’s down from an August forecast for a shortfall of 3.5 million bags. Volcafe cut its demand forecast by 0.5 percent to 152.3 million bags for the current crop year, although that’s still higher than the 149.9 million bags seen in 2014-15.

Volcafe, a unit of commodities merchant ED&F Man Holdings Ltd., also reduced its estimated deficit for 2014-15 to 5.1 million bags from 6.4 million bags. A bag of coffee weighs 60 kilograms, or 132 pounds.

"The tenuous situation in emerging markets due to lower commodity prices and shifts in currency rates has prompted a more conservative outlook to demand for the new season,” Volcafe said.

Global production will be 150 million bags in 2015-16, 0.3 percent higher than its August estimate, and up from 144.6 million bags for the year-earlier period, Volcafe said. Indian farmers will harvest 7.1 percent more coffee than estimated earlier while Uganda will produce 2.9 percent more than previously expected.

Brazil Stockpiles

Volcafe’s estimate for output in Brazil, the largest producer, is unchanged at 48.3 million bags in the 2015-16 season. While the coffee season starts in October in most countries, the Brazilian 2015-16 crop has already been harvested.

Brazil is helping bridge the global production shortfalls by shipping stockpiles of arabica beans, the kind used for specialty drinks such as those made by Starbucks Corp., Volcafe said. No reduction have been observed in inventories held by consuming countries or other producing nations, according to the report.

"As the supply deficits of 2014-15 and 2015-16 have been resolved with Brazilian arabica stocks, the arabica inventory is forecast to fall to the lowest level since 2011-12,” Volcafe said.

The market for robusta beans, used in instant coffee, will face a shortage of 100,000 bags in 2015-16 after a surplus of 800,000 bags a year earlier, Volcafe also said. Vietnam, the largest producer of the variety, will gather 29.7 million bags of coffee, down from a previous estimate for 30 million bags.

"A late start to the rainy season has had a material impact on bean size in some areas which will impact final output," Volcafe said. "Even with the impact of smaller beans, the crop is expected to be the second largest ever."

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