Commodity traders and investors are getting increasingly interested in the global market of coffee. They can make money basing on seasonal forecasts and other major factors.
So, let’s find out the near-term prospects of the coffee market.
What factors drive them coffee market?
Coffee is one of the most popular beverages in the world. Its flavor is well-known to everyone. Over 400 billion cups of coffee are drunk around the world every year. Coffee wakes up and energizes. The global coffee industry is a major sector of the global economy. It feeds millions of people around the globe. Brazil’s coffee industry alone employs over 5 million people.
The coffee production is growing around the globe. Therefore, it seems that coffee is enough for everyone, which will make coffee prices decline. Is it really so?
The thing is that more and more people around the world start drinking coffee, thus increasing the global consumption of this product by 2-3% every year. Another thing is that the present-day rotation of “coffee-drinking” countries looks unpredictable.
According to Eugene Olkhovsky, ’s expert in financial markets form Canada, in 2000 the global harvest of coffee beans was equal to 7 053K tons, which is 13% less than in 2010. Two years ago the global consumption of coffee reached 6 330K tons, which was only 720K tons less than the global production. Strange as it may seem but the coffee-producing counties (there are some 45 of them) consumed only 1 500K tons, or roughly 25% of the total consumption.
New tendency. The global consumption of coffee has been growing since 2010. So far, it has reached 8 085K tons, which means that at this point the global consumption is 60K tons higher than the global production, with coffee producing nations increasing their consumption up to 2 500K tons or 31%.
Prospects. The abovementioned tendency is expected to continue. The consumption of coffee will keep growing. Higher personal income and the growing amount of coffee shops and coffee houses around the globe are some of the factors contributing to the growth.
The following chart reflects the current situation in the global market of coffee:
The balance between the global supply and demand in the 2012-2013 marketing year will probably show a surplus after a significant deficit – 1 million bushels (1 bushel = 60kg).
Global Production Performance
Brazil is the world’s major producer of coffee, last year it produced 2 796 K tons of coffee, which is over 1/3 of the global production. Vietnam is number 2 with 1 076 k tons of coffee, most part of which is Robusta. Columbia comes 3rd – 688 k tons of Arabica (premium-quality coffee). Indonesia is number 4 – 682 K tons of Robusta and Arabica.
Forecasts for 2012-2013. The global production of coffee in the 2012-2013 marketing year is expected to set another record – 146 M bushels of coffee beans – against the preliminary forecast of 135M bushels.
The positive expectations are based on Brazil’s intension to expand its coffee production up to 56M bushels during the next season. The current season is expected to bring 49.2M bushels.
Coffee Market: Near-Term Prospects
According to the analytic team of , even though the global harvest of coffee keeps growing every year the global demand for this product grows even faster. Recently, the demand has exceeded the supply for the first time over the last few decades. Yet it is going to grow further. Consequently, coffee prices will be growing form time to time as well.
As it was expected by the Commodity Trading Department of , coffee prices are currently fluctuating within the 174,5 - 190,5 range.
Market Leader and would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:
What is your coffee market outlook for 2012?
