World Coffee Output to Fall Short of Demand, ICO Says

World coffee supply will fall short of demand in the 2009-10 season, according to Nestor Osorio, executive director of the International Coffee Organization. Production will be 124 million to 125 million bags, compared with demand of 130 million to 132 million bags, Osorio told reporters in Moscow today.

A bag of coffee weighs 60 kilograms (132 pounds). Robusta coffee traded in London dropped 23 percent in the last 12 months while the arabica variety transacted in New York advanced 9 percent. “The differential between arabica and robusta will continue to be very high,” Osorio said.

Production in Vietnam, the biggest grower of robusta beans, will be about 18 million bags, he said. Vietnam’s output in 2008-09 was 18 million bags, according to the U.S. Department of Agriculture. In Colombia, which grows arabica beans, output will probably be no more than 9.5 million bags, compared with 8.7 million bags in 2008-09, according to Osorio. Production was 12.5 million bags in 2007-08 before above-average rain and scant use of fertilizers curbed output in the country.

“The possibility for recovery needs to be postponed by at least another year,” Osorio said. African production is likely to continue to lose market share to growers in Asia. In absolute terms, coffee production in Africa “won’t go lower than today” after declining for 10 years, Osorio said. Coffee exports will average 100 million bags a year in the next three years, compared with 94.7 million in 2009, Osorio said.

Source : Business Week