Stocks in Producing Countries to Continue Rising

Ending stocks in 2013/14 are forecast to continue rising in producing countries, particularly Brazil and Vietnam, while consuming countries remain relatively flat. Global stocks have been rising over the last several years as world production outpaces consumption.

Global production is now forecast at 150.5 million bags, down 2.8 million from the previous year as Vietnam’s record output is more than offset by declines in Brazil, Indonesia, Mexico and Central America. A modest increase in world exports is expected on strong shipments from Vietnam and Colombia.

2013/14 Forecast Overview

Brazil’s production is forecast at 53.1 million bags, down 3.0 million from the previous year due primarily to Arabica trees entering the off-year of the biennial production cycle. Though the year-over-year difference in Arabica output is expected to narrow, last year was affected by frost and dry conditions in Minas Gerais, its main growing region. However, Arabica’s off-year forecast continues its growth trend.

Following 3 years of expansion, the Robusta harvest is forecast to decline 1.1 million bags to 13.9 million as irregular rainfall combined with above average temperatures lower yields in Espirito Santo, where the vast majority is grown. Bean exports are forecast nearly flat at 27.5 million bags, while ending stocks are expected to rise a second consecutive year.

Vietnam’s production is forecast at a record 28.5 million bags, up 2.0 million from the previous year due to higher yields attributed to favorable weather as well as increased area harvested. Initial drought concerns in the coffee region’s Central Highlands were much discussed in January and February, but were quieted by the normal arrival of the rainy season in late March. Favorable weather continued through May and led to good flowering and cherry development. Harvested area continues to expand and is likely above 625,000 hectares despite the government’s goal of reducing area to 500,000 hectares by 2020, a level that was surpassed several years ago. Bean exports are forecast to increase 900,000 bags to 24.5 million, while ending stocks are expected to almost double to 3.8 million bags. Consumption is forecast to continue rising as the coffee culture spreads.

Central America and Mexico account for one-fifth of the world’s Arabica production. The region’s production is forecast to decline 1.4 million bags to 16.9 million due to lower yields from coffee rust. The disease attacks the underside of the leaf, causing it to yellow and drop prematurely, reducing the plant’s photosynthetic capacity and yield. El Salvador is forecast to decline 20 percent, followed by Mexico (-16%), Costa Rica (-15%), Nicaragua (-12%), Guatemala (-8%), and Panama unchanged. However, Honduras is expected to rebound 9 percent with the maturation of new trees. As a result of lower exportable supplies from the region, bean exports are forecast to decline 900,000 bags to 14.4 million.

Colombia’s production is forecast at 10.0 million bags, up marginally from the revised previous year on the strength of recent months’ deliveries, several of which approached or exceeded historical amounts. This turn-around for a second consecutive year is in sharp contrast to significantly reduced output the previous four seasons caused by the spread of coffee cherry borer and rust. Bean exports are forecast to rise 900,000 bags to 9.0 million, while imports are forecast to remain high at 700,000 bags.

Indonesia’s production is forecast to drop 1.0 million bags to 9.5 million as dry weather at the beginning of the season reduced flowering, while excessive rain during cherry development further cut yields. Bean exports are forecast to decline 900,000 bags to 6.0 million.

India’s production is forecast to slip 200,000 bags to 5.1 million on lower Robusta output in Karnataka, the largest coffee producing state. Heavy rains during the monsoon season caused some cherries to drop, lowering yield. Although bean exports are forecast to dip 75,000 bags to 3.7 million, this marks the fourth year of strong exports and declining stocks.

The European Union accounts for nearly half of world bean imports and is forecast to increase 600,000 bags to 45.5 million, with top suppliers including Brazil (28%), Vietnam (25%) and Honduras (7%).
Ending stocks are expected to rise incrementally.

TheUnited States imports the second-largest amount of coffee beans and is forecast to increase slightly to 23.5 million bags, with top suppliers including Brazil (25%), Vietnam (18%) and Colombia (13%).
Ending stocks are forecast to rise marginally.

Revised 2012/13

World production is revised up from the June estimate by 2.6 million bags to 153.3 million.

• Vietnam is up 1.6 million bags to 26.5 million on higher-than-anticipated yield.

• Colombia is raised 900,000 bags to 9.9 million on unexpected strong deliveries in the second half of the season, the highest percent of the yearly total in nearly 40 years. Weak deliveries in the first half were similar in volume to previous seasons plagued by coffee cherry borer and rust.

World ending stocks are raised 3.5 million bags to 33.8 million.

• Vietnam is revised up 1.1 million bags to 2.0 million on larger available supplies.

• European Union is raised 500,000 bags to 11.2 million on lower-than anticipated consumption.

• Brazil is 340,000 bags higher to 7.1 million bags, offsetting lower exports.

• Colombia is raised 320,000 bags to 750,000 due to increased supplies