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Global Coffee Market Update: Production Trends & Demand Growth Expectations

The coffee market underwent a record crop in 2010/2011, but a cyclical downturn in Brazil is predicted to reduce the global production for 2011/2012. Despite this, Brazil's coffee exports are still high. Colombian production is recovering, Vietnam's production may decline, and Indonesia's output is impacted by excess rainfall. Demand is on the rise, particularly from Emerging Markets, creating a balanced production-demand scenario with a surplus expected by the end of 2011/2012. The demand for Robusta is strong, with an increasing share in global blends. The Arabica share is higher in developed countries. Sustainability certifications like Rainforest Alliance and Utz show significant growth rates. Market dynamics such as mild differentials, basis FOB prompt shipment, and ICE stocks levels are also important factors influencing the coffee market.

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Global Coffee Market Update: Production Trends & Demand Growth Expectations

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  1. Nov 2011

  2. Record crop in 10/11, but 11/12 will be smaller due to cyclical down-turn in Brazil Brazil-10/11 58.2 m. bags, 11/12 46.9 m. bags *- provisional

  3. Brazil coffee exports remain at a high level

  4. Colombian production is slowly recovering from disasters in 08/09 & 09/10 * Preliminary

  5. Vietnam production remains at a high level, but is expected to fall in 10/11 * Preliminary.

  6. Indonesia production is dipping due to excess rainfall during La Niña * Preliminary. Crop year start in April

  7. Demand is growing Projection 2000-10: 2.1% 2010-20: 1.7% 1990-2000: 1.3%

  8. Growth is coming from Emerging Markets Projection

  9. Production balanced with demand in last 2 coffee years, surplus develops at end of 11/12

  10. Total Demand Growth by Region per cent per annum

  11. Robusta Demand Growth by Region per cent per annum

  12. Natural Demand Growth by Region per cent per annum

  13. Robusta share tends to be higher in growing regions *- includes India & N. Africa

  14. Naturals not quite so well placed to take advantage of growth markets *- includes India & N. Africa

  15. Demand for robusta has also been strong Projection 2000-10: 3.63% 2010-20: 2.3%

  16. Increasing share of Robustas & Naturals in blend in importing countries

  17. World Blend: Increasing use of Naturals in developed coffee markets of EU

  18. Arabica share tends to be higher in developed countries Shares based on green imports 2005-07

  19. The Changing Blend: As income increases the share of arabica increases. Finland

  20. Rainforest Alliance has highest sales growth Average growth rate of 51% p.a since 2005 *- Projection

  21. Utz sales growth is averaging 39% per annum *- Projection

  22. Mild differentials have been almost as volatile as futures prices Basis FOB Prompt Shipment

  23. And apparent loss of Brazil competitiveness Basis FOB Prompt Shipment

  24. ICE Stocks are at an extremely levels To End Oct 2011

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