27 May Market Report
Overview
Most forecasters adjusted global production forecasts for the coming year to around 154 mio bags, this was largely due revised Brazilian crop estimates of from 48 to50 mil bags.
Brazil
The 2014 crop figure increased as the current seasons forecast exceeded all expectations. Instead of a 47 mio bags closer to 50 mil made up of 31 mil Arabica and 19 mio Robusta. Of particular note is the increase in Robusta exports in the last 12 months both in green and soluble forms. The 2015 crop is likely to be around 52 mio bags with better rains earlier in the year resulting in higher yields.
Vietnam
Crop estimates projected for 15/16 of around 30.4 mil bags is projected. Whilst less precipitation than average over the dry season raised concerns it is not anticipated to have a negative impact. The arrival of regular rainfall in late May-June is important for the support of moisture levels and subsequent tree health.
Indonesia
The 15/16 crop is forecast at 11.2 mio bags, approx. 9.8 mio Robusta and 1.4 mio Arabica. With the better crop likely to be 20 % higher than the previous season export availability should be approx. 25 % higher than 13/14. Indonesian Robusta exports in the 14/15 season were lower than Brazils and the lowest for the country since 11/12.
Colombia and the America’s
The production outlook remains unchanged for Colombia with the largest crop in 20 years forecast for 15/16. The 15/16 projected crop signals the return to levels seen before 2008 and the problems associated with negative weather, disease and a major renovation program seem to have finally overcome.
Central American numbers remain basically unchanged with production still expected to be rust-affected, an increase of 8% is forecast for Central American output in 15/16 and a 30 % rebound is likely in Peru.
Africa
The outlook for both Tanzanian and Kenya crop numbers has been reduced while Ethiopian and Uganda numbers are likely to remain unchanged. The Tanza crop is pegged at 1.1 mio bags for 14/15 and 15/16 repectively while Kenya output is seen at 700 k and 750 k. African 12 month exports have fallen 1.0 mio bags since the July 2013 peak.
Demand
Global demand is expected to be slightly lower as Robusta disappearance is running below previous expectations. For 14/15 consumption is seen at 150.2 nio bags up 1.5% from the previous season. For 15/16 growth outlook is likely to be flat, trade flows and green coffee disappearance to date suggests this. Given the adjustments to supply and demand it is anticipated that a 6.4 mio bag deficit in 14/15 and a minor surplus of 1.3 mio bags for 15/16. The deficit of 14/15 has come in the form of a stock drawdown of Brazil inventories.