ICO raises 2018-19 global coffee surplus forecast

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The International Coffee Organization (ICO) has raised its forecast for global coffee production in 2018/19 to 168.05 million 60-kg bags from its earlier estimate of 167.47 million.

World consumption in coffee year 2018/19 is estimated at 164.99 million bags compared to 161.38 million bags in 2017/18.

The inter-governmental body now sees a global surplus of 3.06 million bags for the season versus a previously expected surplus of 2.29 million.

In 2017/18, there was a surplus of 4.16 million bags, following a deficit of 366,000 bags in coffee year 2016/17. This overhang of supply has greatly contributed to current low prices.

The ICO cut its estimate for arabica production in 2018/19 to 103.71 million bags from 104.01 million but raised robusta production to 64.37 million from 63.50 million.

2018/19 is expected to be the second consecutive season of surplus, as global output exceeds world consumption. However, given the stronger growth in demand, the surplus for 2018/19 is projected to be around 1 million bags less than in 2017/18. This excess in supply continues to put downward pressure on prices that will likely continue over the next few months.

World consumption is estimated at 165.19 million bags in 2018/19, an increase of 2.1 per cent compared to 2017/18. Domestic consumption in exporting countries is estimated to increase by 1.4 per cent to 50.3 million bags. Consumption in importing countries is estimated to rise by 2.5 per cent to 114.88 million bags.

Demand from non-traditional importing countries continues to grow, accounting for around 18 per cent of global consumption in 2018/19. Both African and Asia and Oceania are estimated to increase consumption by 4.1 per cent to 12.23 million bags and 36.25 million bags, respectively. These regions are seeing demand increase in some producing countries as well as in newer markets in importing countries.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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