USDA FAS releases Coffee: World Markets and Trade 2020/21 forecast overview

The United States Department of Agriculture (USDA) Foreign Agricultural Service (FAS) has released its World Markets and Trade report, including a forecast overview of the 2020/21 coffee trade.

The biannual report, published in June and December, includes data on US and global trade, production, consumption and stocks, as well as analysis of developments affecting world trade in coffee. Impacts of COVID-19 have been taken into consideration for the preparation of the 2020/21 report.

THE USDA FAS forecasts world coffee production for 2020/21 to be 9.1 million 60-kilogram bags higher than the previous year, to a record 176.1 million.

Brazil is forecast to account for most of the gain as its Arabica crop enters the on-year of the biennial production cycle and Robusta reaches record output. World exports are forecast higher, largely on the strength of Brazil. Global ending stocks are expected to jump to a six-year high as production outpaces consumption.

Coffee prices, as measured by the International Coffee Organization (ICO) monthly composite price index, retreated in the last few months to average US$1.04 per pound in May 2020.

The report forecasts Brazil’s Arabica output to gain 6.8 million bags above the previous season to 47.8 million. Good weather conditions prevailed in most coffee regions, supporting fruit setting and development and filling, thus resulting in high yields.

The USDA FAS expects bulk of the Arabica harvest, started between May and June, and the quality of the crop to be better than the previous harvest.

Robusta production is forecast to gain 1.8 million bags to a record 20.1 million. Abundant rainfall is expected to boost yields in the three major producing states of Espirito Santo, Rondonia, and Bahia. Also, expansion of clonal seedlings and improved crop management techniques are expected to aid this year’s gain. The majority of the Robusta harvest started in April and May. The combined Arabica and Robusta harvest is forecast up 8.6 million bags to a record 67.9 million. Approximately half of the output gain is expected to be exported, with the remainder stocked.

Vietnam’s production is forecast at 30.2 million bags, down 1.1 million from last year’s record harvest. Cultivated area is forecast unchanged from last year, with over 95 per cent of total output remaining as Robusta.

The beginning of the rainy season got off to a dry start, followed by below-average precipitation in many of the major growing areas. February to May are normally dry months and coffee requires irrigation during this period to ensure proper blossom and cherry setting. However, low coffee prices were a disincentive to incur irrigation costs, reducing yields for some growers.

Bean exports are forecast flat at 24 million bags, while inventories are expected to remain elevated.

Colombia’s Arabica production is forecast up 300,000 bags to 14.1 million on favourable growing conditions and higher yields. Bean exports, mostly to the US and European Union, are forecast up 400,000 bags to 12.4 million. With consumption also rising, USDA FAS expects ending stocks to be slightly lower.

Indonesia’s output is forecast to slip 400,000 bags to 10.3 million on lower Robusta output. Delayed rains in Southern Sumatra and Java, where approximately 75 per cent of the Robusta crop is grown, lowered yields.

Arabica production, situated in Northern Sumatra, had favourable growing conditions and is expected to raise output 50,000 bags to 1.3 million. Ending stocks are expected to remain elevated at 2.6 million bags, as current prices offer little incentive to draw inventories lower. Bean exports are forecast 200,000 bags lower to 5.9 million.

India’s production is forecast to gain 400,000 bags to 5.3 million as favourable weather during the flowering and fruit set period is expected to improve Arabica and Robusta yields. Bean exports are forecast down 300,000 bags to 3.3 million, while inventories are expected to rise slightly.

Central America
Total output for Central America and Mexico is forecast up 600,000 bags to 18 million bags. The report says coffee rust remains in the region and continues to impact output.

The USDA FAS expects Honduras to account for nearly all the region’s growth, rebounding 500,000 bags to 6.1 million on favourable growing conditions coupled with increased application of fertilisers to boost yields. Honduras accounts for about one-third of the region’s output.

Mexico and Guatemala each account for about 20 per cent of the region’s output, and they continue to implement programs to replace trees with rust-resistant varieties.

Nicaragua’s production is forecast to drop a third consecutive year on lower yields due to coffee rust.

The combined bean exports for Central America and Mexico are forecast flat at 14.5 million bags. Over 45 per cent of the region’s exports are destined for the EU, followed by about one-third to the US.

EU imports are forecast up two million bags to 49.5 million and account for nearly 45 per cent of the world’s coffee bean imports. Top suppliers include Brazil at 29 per cent, Vietnam at 23 per cent, Colombia at 7 per cent, and Honduras at 6 per cent. Ending stocks are expected to rise 1.0 million bags to 14.5 million.

The US imports the second-largest amount of coffee beans, and the report forecasts it up two million bags to 27 million. Top suppliers include Brazil at 24 per cent, Colombia at 22 per cent, Vietnam at 16 per cent, and Honduras at 6 per cent. Ending stocks are forecast to grow 500,000 bags to seven million.

To read the full report, click HERE.

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