Cosecha 2009 – 2010, ICO Sees Coffee Supply Below Demand
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Source: Reuters
31/03/200 |
London, March 31 – Global coffee supply is expected to be some 6-8 million 60-kg bags below demand in 2009/10, due in part to falling output in key producers, International Coffee Organization chief Nestor Osorio said.
“We are going to have a deficit. Inventories are very low. I think we are heading for a very firm market,” Osorio, executive director of the London-based body, told Reuters financial television on Tuesday.
Osorio was referring to expectations of lower output in Brazil, Vietnam, Colombia and Central America.
ICE arabica futures, which were up 1.1 percent before the Reuters report, ticked higher shortly after the news to stand up 1.6 percent or 1.8 cents to $1.1480 per lb.
Futures later edged back slightly to stand at $1.1445 per lb, up 1.45 cent or 1.3 percent in the mid-afternoon.
“It (news) may have been good for 50 points (0.5 cent),” one London-based coffee trader said.
“The market had already been reasonably steady (firm).”
Osorio said 2009/10 will be an off-year in Brazil’s biennial production cycle and said he saw a scarcity of quality washed arabicas in the world’s number 3 producer Colombia, due to the impact of heavy rains and a programme to renew coffee trees.
Referring to a recent widening of differentials of Colombian coffee over benchmark New York (ICE) arabica futures, Osorio said, “(It) means a kind of a squeeze in the market because some contracts and some deliveries of coffee could not be fulfilled.”
He added, “There is no coffee to replace in the blends the coffee that Colombia and Central America cannot offer.”
The tightness of supply was particularly acute in Colombia where the authorities have implemented a coffee tree renewal programme aimed at raising production to 17 million bags in four or five years from around 11-11.5 million bags now.
“In the meantime, there is a clear scarcity of quality washed arabicas from Colombia,” Osorio said.
Osorio said he saw risks of a cut in consumption of coffee in emerging economies like Russia and eastern Europe, and China.
“(In) emerging markets like Russia and China and eastern Europe, where the habit of consumption is not well cemented, and where coffee is considered as a luxury item, I think there could be some kind of reduction, but I don’t think it will be very significant.”