The International Coffee Organization flagged a “well supplied” coffee market as it ditched an estimate of a global production deficit last season – and lowered ideas on shortfalls for the two previous years too.
The ICO, which had estimated world coffee production in 2016-17 at 1.19m bags behind consumption, revised its forecast to show a surplus of 2.38m bags for the season, which ended in September.
The revision reflected an upgrade, “on the basis of new information from member countries”, of 3.57m bags to 157.4m bags in the estimate for world production.
Meanwhile, the organisation held at 155.1m bags its estimate for world consumption.
‘Market is well supplied’
“After increasing for two consecutive years, world coffee consumption is estimated to have remained stable,” the ICO said.
“Given the rise in global coffee output against stable consumption, coffee year 2016-17 is now seen in surplus after two consecutive years of deficit.”
The world coffee market “is well supplied at the start of coffee year 2017-18 by the replenishment of stocks over this past year”, the organisation added.
Indeed, the ICO cut too its estimate for the world output deficit in 2015-16, by 688,000 bags to 3.22m bags, and for 2014-15 by 315,000 bags to 2.71m bags.
These revisions reflected in the main higher estimates for robusta coffee output, particularly in Asia.
Combined, the revisions to these two seasons and the figure for 2016-17 added more than 4.5m bags to the organisation’s estimate for world coffee supplies.
‘Prices drifted downwards’
The ICO flagged that coffee prices “have drifted downwards since the end of August”, averaging 120.01 cents a pound last month, according to an ICO composite index - a 17-month low.
For “other milds”, the index dropped to 4.0% month on month 140.71 cents a pound, the lowest since January 2014, undermined by the soaring exports from Honduras.
An ICO robusta coffee index fared relatively well, in easing by 0.8% to 98.39 cents a pound.
However, robusta futures proved less resilient on Tuesday, closing down 1.7% at $1,824 per tonne in London for January delivery, a 14-month closing low for a nearest-but-one contract, in a decline seen as fuelled by ideas of supplies coming online from the newly-started Vietnamese harvest.
New York arabica coffee futures for December eased by 0.7% to 124.70 cents a pound.