Coffee market perspectives

According to the USDA’s latest report, the global production of coffee in 2011-2012 is estimated at 135M bushels (1 bushel = 60 kg) mainly due to the record harvest of “Robusta” in Brazil and Vietnam and better harvest in Columbia.  However, Brazil’s harvest of “Arabica” is expected to decline.

The International Coffee Organization (ICO) expects the global harvest of coffee to reach only 130M bushels. Brazil’s harvest of “Robusta” is expected to grow by 1.8M up to 14.5M bushels (which is a record) while the harvest of Arabica is believed to decline by 7,1M down to 34.7M bushels because of the current low-productivity cycle of coffee.

Vietnam is expected to boost its coffee production by 1,9M up to 20,6M bushels due to favorable weather conditions. Columbia will probably harvest 10.5M bushels of coffee, which is lower than the average value of 11,8M. The reasons are heavy rains and diseases of coffee trees.

According to the Department of Commodity Trading of , the global consumption of coffee keeps growing. Together with high prices it stimulates the global production of this product. The high prices on coffee are supported by low global reserves. Over the last 12 months the price has doubled. However, the supplies of new coffee harvest to the global market will probably make coffee a little bit cheaper.

At the moment the price of Arabica has retraced a little and is moving around 2,6$/pound. The downward dynamics is fairly probable.