GLOBAL— Dutch multinational banking and financial services company, Rabobank has lowered its forecast for global coffee production for the upcoming 2022/23 season, saying high prices had very little impact on harvests in Brazil, Colombia, Honduras and Vietnam.
The bank sees global coffee production dropping to 169 million bags of 60 kg in 2022/23, from a previous estimate of 172.3 million bags, representing a deficit of 1.3 million bags, mainly of Arabica.
The bank reduced the forecast for arabica coffee in Brazil, the world’s largest producer, from 41.4 million bags to 40.1 million bags, attributing the reduction to dry weather, while the conilon/robusta harvest was estimated at 23 .1 million bags.
Rabobank said that global coffee demand is largely inelastic and does not expect any significant drop in consumption, at least not in mature markets, in the event of a recession. However, coffee prices are skyrocketing globally.
American multinational investment bank and financial services corporation, Citigroup has cut its estimate for Vietnam’s coffee crop in 2021/22 and 2022/23 by 1 and 2 million bags respectively. The group pointed at a crop survey saying the cherry development has suffered from a lack of fertilizer use this year.
Rabobank said that global coffee demand is largely inelastic and does not expect any significant drop in consumption, at least not in mature markets, in the event of a recession. However, coffee prices are skyrocketing globally.
Amid tightened bean supplies, domestic coffee prices in Vietnam, the world’s top Robusta producer, have risen, with exporters saying they had been struggling to buy beans for the past few months.
In marketing year (MY) 2022/23, Colombia’s coffee production is forecast to remain unchanged at 13 million bags of green bean equivalent (GBE).
Although weather conditions are expected to be normal, crop productivity has the potential to be negatively impacted also as a result of lower fertilizer use due to rising prices.
Reference prices for Arabica coffee on the ICE futures exchange are down 1.8% so far this year, having risen 73.6% last year. They reached their highest level in a decade earlier this year and remain high in historical terms.
Rabobank said prices are likely to remain volatile for some time, with ICE stocks expected to remain critically low until November next year, boosting prices as fears of recession, war and an energy crisis in Europe exacerbate the situation.
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