ICO predicts supply surplus for next coffee year

The International Coffee Organisation (ICO) estimates 2012-13 coffee production will hit 147 million bags, an increase of 12.5 million bags over the coffee year that just wrapped up last September. With with world's largest producer Brazil set to hit an on-year in the biennial cycle of Arabica production, and the world's second largest producer Vietnam increasing production by 23.6 per cent last year, the ICO says that if record production continues the coffee market could move into a surplus of supply. This would be the first time coffee production would surpass consumption in five years. With stocks diminishing significantly in these last five years, the ICO anticipates that this would have a limited effect on prices.  “If the record production for 2012-13 is confirmed, the coffee market will move into a surplus of supply,” the ICO stated in its October coffee market report. “Although any impact on prices is likely to be modest given the need to replenish stocks, especially in producing countries.”  Global consumption was estimated at around 139 million bags in 2011, and is expected to increased further in 2012. As such, even with increased production, the ICO said that the supply/demand balance will remain relatively tight.  Total exports for the 2011-12 coffee year were confirmed at 107.8 million bags, the highest level on record, marking a 3 per cent increase over the previous coffee year. 

Leave a Reply

Send this to a friend