Poor weather conditions in key areas prompts Rabobank to increase global coffee deficit forecast

Dry weather across all the major robusta producing regions has prompted Rabobank to increase its forecast of next season’s global coffee deficit.

The bank cut it forecast of the 2015-16 deficit, with total coffee production undercutting supply by only 0.8m bags against a previous forecast of 1.2m bags.

But for 2016-17, Rabobank forecast demand exceeding supply by 2.2m bags, 1.5m bags more than earlier. The shortfall is down to very low production of robusta.

The robusta market for 2016-17 is forecast in defict to the tune of 4.6m bags, 1.3m bags more than previously thought.

“Since our last outlook, the weather in India, Thailand and Brazil’s robusta areas has been drier than normal,” Rabobank said, adding that it did not expect any major origins to have an excellent crop.

“Dryness in India (also responsible for a large rally in sugar) should cause a double digit drop from the very good levels seen in the last harvest.”

Crops in Thailand and Laos are also going to suffer from dry weather.

Dry weather has also been an issue in Brazil, the world’s second ranked grower. Rabobank maintained its 2016-17 Brazilian crop forecast, at 52.6m bags, including 12.6m bags of robusta.

But focus is now turning to the 2017-18 crop, the bank said.

“After constantly disappointing rains, the market is wondering how low the next Brazilian robusta crop can be,” Rabobank said.

“We believe anything above 16m bags is unlikely, as branch growth has been extremely poor.”

“The defining factor will be the rains during the flowering period,” it said.

“Low rainfall in the past few months means that reservoirs are currently low or empty, and as a result, farmers will not have enough water to artificially induce flowering. Thus, we cannot discard the possibility of an even lower robusta crop next season.”

 

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