World coffee production is pegged at 135 million 60-kg bags in 2011/12, when global output will exceed consumption for the second straight year while ending stocks stay tight, the US Agriculture Department forecast on Friday.
Arabica coffee futures trading on ICE surged nearly 130 percent to a 34-year high at $3.0890 per lb in early May, in an 11-month rally that started in June 2010. The market soared far beyond levels anticipated by many analysts on concern about tight global supplies of high-quality beans and on speculative buying.
The market has since fallen more than 20 percent. The USDA forecast global ending stocks will sit at 26.4 million bags, down from 2010/11 at 26.8 million bags in 2010/11 but up from 2009/10 at 24,418 bags, which was the lowest since 2000/01.
"Stocks are forecast to remain at diminished levels, leaving little cushion should there be a supply problem. In response to the multi-year stocks drawdown, prices have spiked," the USDA report stated. The USDA's global coffee projection is down only 2.9 million bags from 2010/11, a small amount as top grower Brazil enters its low-production year in its biennial cycle.
The International Coffee Organisation forecasts global coffee production around 130 million bags. Brazil will produce 49.2 million bags of coffee, down 5.3 million bags from its previous crop, the USDA said. Vietnam, the world's biggest producer of robusta coffee beans, will grow a record 20.6 million bags, up 1.9 million bags from 2010/11, forecast USDA. Colombia was forecast to grow 10.5 million bags, up 1 million bags from the previous crop. Indonesia was forecast to produce 7.9 million bags, down 1.4 million bags from the previous crop. World coffee exports are forecast at 102.1 million bags in 2011/12, down from 107.5 million bags from the preceding season.
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