World coffee stocks to fall faster than had been thought, to six-year low


World coffee inventories will fall far quicker than previously expected, to a six-year low, Washington said - even as industry data showed stocks in the US falling at their fastest pace in three years.

The US Department of Agriculture, in a twice-yearly sector report, forecast at 2.76m bags the drop in global coffee stocks over 2017-18 – well ahead of the 1.14m-bag decline previously expected.

World coffee stocks are now expected to end the season at 29.27m bags, which would be the lowest since the end of 2011-12.

“With global consumption forecast at a record 158.5m bags, ending inventories are expected to drop sharply,” the USDA said.

Inventory declines

Indeed, the revision to the forecast for year-end stocks came as the USDA upgraded by 1.1m bags to a record high its forecast for world coffee consumption over 2017-18.

The dynamic will help shrink inventories in the European Union, the top coffee drinker, by nearly 800,000 bags to 10.5m bags - “the lowest level in five years”, and contrasting with previous expectations of a rise in stocks.

In the US itself, the world’s second-ranked coffee market, stocks will fall by 600,000 bags year on year to 6.60m bags, below a previous estimate of 7.0m bags.

The data came as the Green Coffee Association reported a drop of 297,527 bags, to 6.74m bags, in US coffee stocks last month – the biggest fall in three years.

US inventories have now fallen by some 700,000 bags from the 7.4m-bag figure reported for July which was the largest since 1993, when they peaked at 10.05m bags, according to J Ganes Consulting.

‘Good flowering and fruit set’

However, the USDA downgraded expectations for stocks in some major coffee growing countries too, including Vietnam, where it ditched forecasts of a growth in inventories over 2017-18, seeing instead a fall of 70,000 bags to 1.11m bags.

This despite an upgrade to the estimate for the ongoing harvest in Vietnam, the world’s second-ranked coffee grower, by 1.3m bags to a record 29.9m bags.

“Ideal weather led to good flowering and fruit set,” the USDA said, adding that “also, farmers benefited from the previous year’s higher prices, allowing them to increase expenditures for fertilizers and other inputs to raise yields.”

For Honduras, the output forecast was raised by 1.0m bags to a record 7.5m bags “on higher yields”, extending a trend of market upgrades for the country, after bumper export data underlined talk that output has been far better than had been expected.

Brazil data

For Brazil, the top grower, the USDA cut its forecast for stocks at the close of 2017-18 by 1.32m bags to 2.57m bags, reflecting a downgrade to output expectations.

The estimate for the, completed, 2017-18 harvest was cut by 900,000 bags to 51.2m bags, led by worsened ideas of the arabica harvest.

“Coffee beans are smaller-than-anticipated in many areas of Minas Gerais and Sao Paulo,” the USDA noted as it cut its estimate for the Brazilian arabica crop by 1.7m bags to 38.8m bags.

This downgrade was in part offset by an upgrade of 800,000 bags to 12.4m bags in the estimate for robusta output, taking it 1.9m bags up from last year, when “output plummeted to a seven-year low due to above-average temperatures and a prolonged dry spell in Espirito Santo, where a majority is grown”.

Still, the USDA’s output hopes for Brazil are higher than that expectations from many other forecasts, with Rabobank, for instance, last week pegging the total 2017 harvest at 49.2m bags, while Volcafe last month estimated the arabica crop at 36.7m bags.


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