Coffee prices are expected to rise as the global market is set to have a supply deficit of 8.8 million bags in 2014 – 2015, the most in nine years, compared to the surplus of 7 million bags this season.
Coffee growers worldwide will harvest 142.7 million bags of coffee, while consumption is set to rise 2% to 151.5 million bags, according to Volcafe, a unit of trader ED&F Man.
“Drought in Brazil at the beginning of the crop year will result in global supply deficit and concerns over its crop will trigger price rise,” Jawaid Akhtar, Chairman of the Coffee Board said.
In Brazil, the world’s largest coffee grower, farmers harvested 44.57 million in 2014, a drop of 9.3% from 49.15 million bags in 2013.
The crop production in Indonesia, the third largest producer, is forecasted to fall 14% to 10 million bags in 2014 from 11.67 million bags recorded in the previous year, Akhtar said.
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Meanwhile, in Vietnam, the world’s biggest producer of robusta beans used by Nestle SA, farmers will probably hold smaller stockpiles in three years after the surge in prices and boosted sales, indicating a shortage in global supplies.
Unsold Inventories in Vietnam reached 850,000 tons at the end of August from a record 17 million ton output in the year started October, compared with 150,000 tons in the previous year, according to the Bloomberg survey.
According to Volcafe, the robusta beans shortfall will be 1.9 million bags, while the arabica shortage will be 6.9 million bags in the year from October.
Robusta futures traded at $2,011 a ton on the NYSE Liffe on Thursday, while arabica rose 66% to $1.837 a pound this year. The premium of robusta and arabica increased $1.166 a pound this year from 34 cents in December.
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