Bloomberg News

Global Coffee Production Seen Reaching Record in 2012-13

March 09, 2012

Global coffee output will climb to a record next season as the crop in top global producer Brazil rises, according to CoffeeNetwork, a unit of INTL FCStone Inc. (INTL)

Farmers around the world will harvest 146 million bags in the 2012-13 season, an increase of 8.1 percent from an estimated 135 million bags in 2011-12, Andrea Thompson, the Belfast-based head of research and analysis at CoffeeNetwork, said in a report e-mailed today. The 2012-13 season starts in October in most countries. A bag of coffee weighs 60 kilograms (132 pounds).

Production in Brazil will jump to 56 million bags in 2012-13 as arabica trees enter the high-yielding half of a two- year cycle, Thompson estimated. Output in the current season will be 49.2 million bags, according to the U.S. Department of Agriculture. The season in Brazil usually starts in July.

Coffee climbed to a 14-year high of $3.089 a pound in New York in May as Brazil’s production dropped due to its biennial cycle and rains cut output in Colombia, the second-biggest arabica grower. Prices have fallen 39 percent since then as traders sold the beans in anticipation of improved supplies.

“The tight supply situation in 2011-12 was one of the factors behind the rise in prices to multi-year highs,” Thompson said. “The market is now well off those highs and there has been a growing feeling as 2012 progresses that there is currently more downside potential than upside for the market.”

The global supply and demand balance may return to a surplus in 2012-13 after an estimated deficit of 1 million bags in the current season, according to CoffeeNetwork.

Robusta Production

Robusta coffee production will rise to 58 million bags in the current season, up from 55 million bags in 2010-11, according to CoffeeNetwork. That will leave a robusta surplus of nearly 1 million bags, Thompson estimates.

The price of robusta coffee will average $1,750 a ton to $1,850 a ton in the first quarter, she said. Robusta coffee for May delivery closed at $2,088 a ton yesterday.

Arabica coffee is grown mainly in Latin America and favoured for specialty drinks such as those made by Starbucks Corp. (SBUX) Robusta beans are grown mainly in Asia and parts of Africa and are used in instant drinks and espresso.

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.


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