World Arabica and Robusta Coffee Production Converging

Global production for 2014/15 is now forecast at 149.8 million bags, down 2.7 million from the previous year as lower output in Brazil, Peru, Indonesia, and Vietnam more than offsets gains in Central America and Colombia. World Arabica production is expected to decline a second consecutive year while Robusta continues to rise, narrowing Arabica’s dominance from 62 percent 4 years earlier to an estimated 55 percent. With global consumption forecast to rise, inventories are expected to fall. World bean exports are forecast nearly unchanged.

2014/15 Forecast Overview

Brazil’s Arabica output is forecast to drop a second consecutive year, to 34.2 million bags, breaking the biennial cycle for the first time in over two decades with a harvest 19 percent lower than the last “onyear.” Prolonged drought as well as high temperatures in Minas

Gerais and Sao Paulo (about 80 percent of Arabica production) adversely affected the size of the beans. Also, Parana’s Arabica output is forecast 800,000 bags lower following extensive tree removal due to last year’s frost damage. The Robusta harvest is forecast at a record 17.0 million bags as output rebounds from last year’s weather related shortfall in Espirito Santo, where the vast majority is grown. The combined Arabica and Robusta harvest is forecast at 51.2 million bags, down 3.3 million from last year. Lower available supplies are expected to drop ending stocks to 6.9 million bags and reduce green bean exports slightly to 30.0 million. Consumption remains flat after two decades of steady expansion.

Vietnam’s production is forecast to decline 480,000 bags to 29.4 million. Although yields are expected slightly lower due to trees being stressed by last year’s record output, these losses are almost fully offset by continued area expansion. In the last 5 years, farmers increased area over 20 percent and yield 30 percent in response to elevated prices. Bean exports are expected to ease nearly 300,000 bags to 25.5 million due to increased competition from Brazil and India’s larger Robusta harvest.

Colombia’s production is forecast up 425,000 bags to 12.5 million on higher yields. Continued growth is expected following 5 years of below-average output due to the spread of coffee rust and coffee cherry borer. The rust initially affected as much as 40 percent of the planted area, but has since declined to less than 5 percent following an aggressive tree renovation program. Colombia is expected to rely on imported beans from Ecuador and Peru for just 20 percent of consumption, down from nearly 90 percent a few years ago. Bean exports are forecast to gain 700,000 bags to 11.0 million on increased shipments to the United States and Europe.

Central America and Mexico account for one-fifth of the world’s Arabica production. After two years of declining output caused by coffee rust, the region is forecast to increase 1.1 million bags to 16.7 million. Honduras is expected to add 600,000 bags to 5.0 million as rust-resistant trees from recently renovated land reach maturity. Guatemala is forecast to rebound 200,000 bags to 3.6 million on improving yields. El Salvador, where production plunged 700,000 bags last year, is forecast to rebound 125,000 bags to 675,000 as more growers implement control measures. The region’s bean exports are forecast to gain 1.4 million bags to 13.7 million as a result of more exportable supplies. Typically, 40 percent of the region’s exports are destined for the United States, followed by 35 percent to the European Union.

Indonesia’s production is forecast to drop 700,000 bags to 8.8 million. For the second consecutive year, excessive rain during cherry development lowered yields. Coffee area has stabilized, but is down from its recent peak due to substitution of higher priced commodities. Bean exports are forecast to decline 900,000 bags to 5.1 million on less available supplies. Consumption is expected to continue rising and reach 3.1 million bags. The ready-to-drink (bottled) category has grown significantly in recent years and accounts for as much as 25 percent of total consumption. While originally introduced as an imported product, demand is increasingly met by domestic companies.

Peru’s production is forecast to decline 850,000 bags to 3.4 million on widespread losses due to coffee rust. Bean exports are forecast to decline 900,000 bags to 3.2 million on lower output.

The European Union accounts for nearly half of the world’s bean imports and is forecast to increase 400,000 bags to 45.0 million. Top suppliers include Brazil (29 percent), Vietnam (24 percent) and Indonesia (6 percent). Consumption is expected to rebound 3.1 million bags to 45.7 million, drawing inventories down.

The United States is the second largest importer of coffee beans and is forecast to increase slightly to 24.5 million bags as consumption continues to rise. Top suppliers include Brazil (25 percent), Vietnam (18 percent) and Colombia (13 percent). Ending stocks are forecast 200,000 bags lower to 5.8 million bags.

2013/14 Revised

World production is revised up from the June estimate by 2.4 million bags to 152.5 million.

• Colombia is raised 1.1 million bags to 12.1 million on unexpected strong deliveries in the second half of the season.

• Brazil is revised up 800,000 bags to 54.5 million due to higher-than-anticipated Robusta yield in Espirito Santo.

• Vietnam is nearly 900,000 bags higher at 29.8 million on higher-than-anticipated area expansion.

World bean exports are raised 700,000 bags to 104.8 million.

• Vietnam is raised 800,000 bags to 25.8 million following larger available exportable supplies.

• Brazil is revised up 600,000 bags to 30.6 million on strong U.S. and European demand.

• Honduras is lowered 400,000 bags to 3.9 million on less available exportable supplies.

World consumption is lowered 3.1 million bags to 142.4 million.

• European Union is revised down 3.2 million bags to 42.6 million.

World ending stocks are raised 4.1 million bags to 40.1 million.

• European Union is revised up 1.9 million bags to 12.4 million due to declining consumption.

• Colombia is raised 700,000 bags to 1.0 million due to increased supplies.

• Vietnam is up 500,000 bags on higher output