Global coffee output will exceed demand by 6-7 million bags
this year as Brazil, the world’s largest producer, is in the
more productive phase of a two-year cycle, said Juan Lucas
Restrepo, commercial manager at the National Federation of
Coffee Growers of Colombia. Lower Brazilian output as demand
grows 2 percent will cause the shortfall next year, he added. A
bag weighs 60 kilograms (132 pounds).
“Overall consumption is growing faster than production,
and global inventories will decrease further next year,”
Restrepo said in an interview in Tokyo Oct. 17. “Growth is not
coming from mature markets but from emerging markets.”
Coffee futures in New York reached a 15-month low of
$1.0935 a pound on Oct. 8, plunging 36 percent from a 10-year
high of $1.7190 Feb. 29. Restrepo said the slump was because of “panic” among investors amid the global credit crisis, which
spurred a sell-off in commodities along with other risk assets.
“The credit crunch limits the availability to exporters
and cooperatives of working capital,” Restrepo said. “We might
see problems in coffee supply if it persists.”
Restrepo said $1.20-$1.50 a pound is an appropriate range
for coffee in the next six months, given market fundamentals. He
was in Tokyo to attend the World Specialty Coffee Conference.
Arabica coffee for December delivery gained 2.4 percent to
$1.1560 a pound on ICE Futures U.S. in New York Oct. 17.
Coffee may become the best-performing commodity in coming
months as Brazilian output will decline cyclically and lower
prices may stimulate demand, said Shuji Sugata, research manager
at Mitsubishi Corp. Futures and Securities Ltd. in Tokyo.
“Coffee, along with sugar, has potential to rally
regardless of a bleak economic outlook,” he said by phone.
Coffee output in Colombia will probably fall to 12.1-12.2
million bags this year from 12.6 million bags last year because
of heavy rains, Restrepo said.
“Next year we foresee a similar level of production very
close to 12 million bags,” he said, adding that the effects of
adverse weather on production will probably continue.
The country will export 11.5 million bags this year, up 3.6
percent from 11.1 million bags the previous year, Restrepo said.
Exports next year will fall to 11 million bags, he added.
Coffee production in Colombia will stay around 12 million
bags until the nation completes a program to raise productivity
through replanting trees, Restrepo said.
Under the program started this year, growers eradicate old,
unproductive plantations to replace them with new trees,
Restrepo said. They will renovate 30,000 hectares this year and
expand the area to 300,000 hectares by 2012, he added.
“That will steadily increase Colombian output. By 2016 it
should be above 16.5 million bags,” he said. (Bloomberg)