ICO flags weather threats to coffee - even as it ups supply ideas


The International Coffee Organization cautioned over threats to forthcoming coffee harvests in many major producing countries, even as it slashed its estimate for the output deficit in the newly-finished 2015-16 season.

The intergovernmental group warned that in Vietnam – the second ranked coffee-growing country, where production rose 3.8% to 27.5m bags last season - "dry weather since the beginning of the year is likely to reduce output in 2016-17".

In third-ranked Colombia, where last season's output hit a 23-year high of 14m bags, "the potential development of La Nina could affect the 2016-17 crop.

And for Indonesia too, the fourth biggest coffee producer, where a "good" harvest in 2015-16 saw output hit 11.5m bags, "again, the outlook for 2016-17 is less positive, following adverse weather conditions earlier in the year".

Price highs

The comments – for a 2016-17 season in which top grower Brazil is expected to encounter a "low" crop year in its two-year cycle of larger and smaller harvests - chime with market concerns which have lifted coffee futures to multi-month highs.

New York-traded arabica coffee futures hit a 17-month high of 160.90 cents a pound last month, and remain at elevated levels, standing at 154.45 cents a pound on Friday, up 1.2% on the day.

London-traded robusta coffee for November stood up 0.4% at $2,045 a tonne – only marginally below the 22-month intraday high of $2,053 a tonne hit in the last session.

And the outlook came even as the organisation slashed to 3.31m bags its estimate for the world production deficit in 2015-16, which ended last month, from the 8.8m bags implied by previous data.

South America upgrade

The downgrade reflected in part a cut of 900,000 tonnes, to 151.32m tonnes, in the estimate for bean consumption last year, with reduced expectations for Asia more than offsetting increased ideas of coffee consumption in Africa, Europe and North America.

However, in the main, the cause of the downgrade was a 4.68m-bag upgrade to 148.0m bags in the estimate for world production last season.

Again, the estimate for Asia was downgraded, with the figure for African output downgraded too.

But these revisions were more than offset by a hike of 5.70m bags to 67.0m bags in the estimate for South American production, and spread too between arabica and robusta beans.

Brazil data query

The ICO unveiled an estimate for 2015-16 output in Brazil, the only South American grower of both arabica and robusta beans in any quantity, of 48.4m bags.

While down 5.3% year on year, the figure was well above the 43.24m bags at which Brazilian output has been pegged by the country's official crop bureau, Conab.

However, Conab data, which trusted for many crops, are widely seen as systematically underestimating the size of Brazil's coffee harvest.

The ICO said its data revisions were "part of an in-depth review" of its statistics, which have also seen output raised for the previous three seasons, by a total of more than 16m bags


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