Weak coffee prices may have provoked more coffee drinking than had been thought, although the demand may not prove enough to leave the world with thin supplies.
The US Department of Agriculture lifted by 583,000 bags to a record 148.3m bags its estimate for world coffee consumption in 2015-16.
The upgrade was led by raised expectations for demand in the US – the second biggest coffee drinker after the European Union, and now expected to see annual consumption top 24m bags for the first time – as well as in fourth-ranked Japan.
The changes came hours after the International Coffee Organization also raised its estimate for global consumption last year by some 600,000 bags to 149.8m bags.
“This revision is due to higher-than-expected demand in the European Union,” the ICO said, although it concurred with the USDA in trimming ideas of Brazilian demand.
The stronger ideas for demand come at a time of weakened prices, with New York coffee futures for March closing on Friday at 119.00 cents a pound, among weaker levels of the last five years for a spot contract.
New York coffee hit 101.00 cents a pound in November 2013.
However, there was mixed news from the USDA on the ability of this extra consumption to erode inventories, which increased for three successive years into 2014-15, according to the department’s own data.
The USDA hiked to 5.84m bags, from 2.01m bags, its estimate for the amount by which world coffee inventories will fall over 2015-16.
But it raised by more than 5.1m bags, to 36.69m bags, its estimate for carryout stocks for the season nonetheless, reflecting an increased figure for stocks coming into the season, largely reflecting an upgrade to 2014-15 production.
USDA vs Conab
Indeed, the USDA lifted by 3.1m bags to 54.3m bags its estimate for 2014-15 coffee output in Brazil, the top producing country, following on from comments last month by staff in Brasilia.
The estimate is well above the 45.64m bags at which Conab, Brazil’s official crop bureau, last week pegged the 2014 harvest.
While the USDA sliced its estimate for Brazil’s 2015-16 crop by 3.0m bags to 49.4m bags, that too remains above the Conab figure, of 43.24m bags.
The ICO, in its briefing, noted that there had been “mounting speculation over the size of the next 2016-17 Brazilian crop”.
It added that “in general, prospects for Brazil seem positive, although there is some concern over the conilon crop”, a robusta type.
Indeed, with some commentators voicing concern over output too in Vietnam, the top robusta grower, prices of this bean have further narrowed their discount to arabica coffee, to the lowest in November since early 2014.
The extent of this decline “should provide some support to arabica prices going forward”, the ICO said.
(Source – http://www.agrimoney.com/news/world-coffee-demand-higher-than-thought-us-ico-say–9130.html)