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1213 views January 30, 2017 posted by Maja Wallengren

*ICO Sees Major Coffee Supply Deficit For 3rd Year In A Row In 2016-17 Cycle As Global Consumption Surges

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JAN 14 (SpillingTheBeans)–The International Coffee Organisation has forecast the supply-demand balance in the current world 2016-17 harvest cycle to produce a major supply deficit for the 3rd consecutive year as most producing countries struggle to recover from years of weather-induced crop damage and global demand continues to boom.

The latest figures from the ICO confirm previous projections by SpillingTheBeans and point to a situation which will continue to result in severe headaches for roasters and exporters in keeping up with contract obligations in a timely manner, as production in almost all the world’s main growers continue to suffer big shortfalls due to the negative impact of climate change. This news come as Brazil’s new 2017-18 crop, for which harvesting is expected to start in earnest in May, is expected to drop by as much as 15% on average nationwide to just over 43 million 60-kilogram bags, leaving an internal market deficit of between 5 and 10 million bags alone in Brazil.

“We have also updated our consumption numbers, with final data now available for importing Members in coffee year 2015-16 (October to September). World consumption for 2015-16 has been revised up to 155.7 million bags (up 2.6% on 2014/15). This represents a significant deficit compared to production of 151.4 million bags,” said the ICO market report for the month of December.

The ICO said Arabica production is set for a record level of 93.5 million bags but Robusta production is seen to fall sharply with lower crops expected from most major origins. Prices on the futures markets have reflected these developments recently, with Robusta prices generally showing support and Arabica under pressure, leading to a narrowing in the arbitrage between the two.

The daily price of the ICO composite indicator steadied slightly after its collapse in November, ending the month two cents lower than it started on 130.92 US cents/lb. The composite remained within a relatively narrow range, peaking at 135.04 cents and hitting a 4-month low of 127.62 cents. The Brazilian real also recovered after depreciating in November, but the possibility of a record crop in Brazil in 2016-17 put downward pressure on Arabica prices. Robusta prices, on the other hand, strengthened as heavy rains in Vietnam disrupted supply.

See more detail from the report here; http://www.teaandcoffee.net/1296/news/ico-reports-coffee-production-remain-stable-world-consumption/

To see the report in full; http://www.ico.org/

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