A global coffee deficit could be in our near future, report says
TORONTO -- Addicted to coffee? This might be the time to either stockpile your brand of choice or start weaning yourself off of java juice, because a global coffee deficit could be just around the corner.
A new report released earlier this week by the International Coffee Organization (ICO) found that coffee consumption is expected to outpace production shortly.
This means there could be a deficit of around 502,000 bags of coffee in the 2019-2020 production year, according to the ICO’s November Market Report, which focuses largely on new data from October and November.
Exports of coffee fell in mid-October by 13.4 per cent globally, due to “a mix of factors, including unfavourable weather patterns and prolonged low international prices,” which all contributed to a “decline in shipments across all regions,” according to the report.
Global exports in October tallied nearly 9 million bags -- the lowest one month level for exports since September 2017. Shipments of all types of coffee dropped in October, when compared to the same period in 2018. The rate it dropped was different depending on the variety of coffee and where it shipped from, with some bean shipments falling by only 9 per cent, and others dropping by up to 23 per cent.
The only variety of coffee beans which escaped the decline was Colombian Mild Arabicas, which saw an increase of 13.5 per cent, something the report attributed to the depreciation of the Peso against the U.S. dollar.
In Asia and Oceania, a 23 per cent decline in exports was tracked to a number of potential causes. In Vietnam, farmers delayed selling their coffee beans “due to low domestic prices for coffee,” while production in India was affected by weather patterns such as heavy rain and flooding, as well as increased incidences of an insect called the white stem borer which can spoil coffee crops by laying eggs in the bark.
Central America struggled as well. Honduras -- Central America’s largest producer of Arabica beans -- was affected by a severe drought that caused the government to declare a national emergency in September, which resulted in shipments falling by 25 per cent. Costa Rica had a staggering 66 per cent fall in shipments in October, giving them their lowest monthly export volume in almost 40 years.
In Africa, a decline in Arabica shipments from Uganda was balanced out by an increase in Robustas exports.
Members of the ICO make up 98 per cent of the world coffee production.
The global fall in production was first predicted in the ICO’s October report, but it wasn’t until the November report came out that a deficit was forecast.
It’s unclear exactly how soon this could happen and just how much it could affect coffee prices. The November report, which also said that the global average value of coffee had hit a 12-month high, described the coming deficit as “small.”
And even though the monthly level in shipments has fallen compared to last year’s fall exports, some countries have seen an overall boom in their total exports.
Brazil, which accounted for just over a third of all coffee exports in October, is at a record level of 23.62 million bags of coffee exported so far this year.