Monday, May 27, 2024

ICO sees 2023/24 an exceptional off-year for Brazil’s production

LONDON, UK – The world coffee market is expected to run a surplus of 1.0 million bags in coffee year 2023/24, said the International Coffee Organization (ICO) in a new report published this week. World coffee production was flat (+0.1%) at 168.2 million bags in coffee year 2022/23.

The stagnant growth rate belies the tremendous changes at the regional level, with the coffee world neatly split between the expanding Americas and the shrinking rest of the world.

Asia & Oceania and Africa’s 4.7% and 7.2% decreases in production to 49.84 million bags and 17.9 million bags, respectively, can be attributed to adverse weather conditions negatively affecting key producers in the regions, particularly Vietnam, Côte d’Ivoire and Uganda.

The magnitude of the fall in outputs of the two regions was entirely mitigated by the Americas, especially by South America’s 4.8% increase, which in turn was driven mainly by the biennial production-affected 8.4% increase in Brazil. The combined output of the Americas was 100.5 million bags.

The Americas versus the rest of the world split was also reflected in the production split between the Arabicas and Robustas, with the former’s output increasing by 1.8% to 94.0 million bags as compared with the 2.0% decrease of the latter to 74.2 million bags.

Looking ahead, the output for coffee year 2023/24 is expected to increase by 5.8% to 178.0 million bags, with the Arabicas’ output rising to 102.2 million bags and the Robustas’ increasing to 75.8 million bags, says the ICO.

The biennial production effect will play a large role in the outlook, especially for Brazil and the Arabicas, as the impact of the July 2021 frost continues to be resolved. Coffee year 2023/24 is anticipated to be an exceptional off-biennial year, feeling more like a good on-biennial following an average on-biennial year.

See also  La Marzocco partecipates in The Milan Coffee Festival

Adverse weather conditions, first noted in 2022 and continuing into 2023, will have a negative impact on the outlook for coffee year 2023/24.

According to the ICO, the anticipated El Niño phenomenon is set to dampen the outlook in Asia, especially for origins like Indonesia. Meanwhile, Vietnam is expected to benefit from the drier/hotter weather as irrigation mitigates the reduced precipitation.

The world coffee industry is continuing to resolve through the issues brought about by the COVID-19 pandemic, with the consumption trend following an established patten in response to an external shock. The expectation for coffee year 2022/23 was for a smaller positive growth rate; however, world coffee consumption actually recorded a decrease of 2.0% to 173.1 million bags.

Consumption in coffee year 2022/23 did not faithfully follow the established pattern due to the impact of the high cost of living, falling disposable incomes and a long stocks drawdown. Despite coffee being relatively inelastic, the challenging global economic environment would have had a negative impact on its consumption.

There was a large drawdown of stocks with combined stocks reported by the European Coffee Federation and those held at the Intercontinental Exchange’s warehouses in the USA fell by 4.8 million bags from 14.5 million to 9.8 million.

This drawdown would have reduced the need for purchases on the international market, seemingly reflected as lower and anomalous global consumption rates for coffee year 2022/23.

The world coffee consumption outlook for coffee year 2023/24 is broadly framed by the assumption that the global economy will continue to grow at above 3.0%, and that the industry will respond to the large drawdown of stocks, which will be positively reflected in apparent consumption.

See also  Coffee Quality Institute announces Michael Sheridan as new CEO

As a result, world coffee consumption is expected to grow by 2.2% to 177.0 million bags, with non-producing countries making the biggest contribution to the overall increase. Coffee consumption in this group of countries should expand by 2.1%.

As a result, the world coffee market is expected to run a surplus of 1.0 million bags in coffee year 2023/24, concludes the ICO.

Source link

Related Articles

Java Burn Review

Java Burn Review

Boost your metabolism, increase energy, and burn fat with Java Burn. Made with natural ingredients and no fillers or stimulants. Try it risk-free!

Latest Articles