There will be a global surplus of 3.2 million bags of coffee in the 2018/19 crop year, Rabobank said in a report on Wednesday, reducing its supply forecast after a crop tour in top grower Brazil caused it to lower production expectations. This is down from Rabobank's prior forecast for a 4.1 million bag surplus in 2018/19. It also reduced its 2017/18 deficit forecast to a 2.6 million bag deficit from 4.1 million bags, it said in its first-quarter Coffee Outlook report.
The surplus will be entirely arabica coffee, with global robusta coffee supply expected to be balanced with demand in 2018/19. This compares a 2.1 million bag deficit of robusta and 500,000 bag deficit of arabica in 2017/18, Rabobank said. "With Brazil internal demand expected to keep shifting towards robustas, a large arabica exportable surplus is expected to put pressure on the market in the short term," Rabobank said.
"However, the higher end of production estimates may prove to be too optimistic, and therefore, we are friendly towards arabica prices in Q3 2018." In addition to reducing its 2018/19 coffee production forecast in Brazil earlier this month to 56.8 million from a prior estimate of 59 million bags, it has also cut expectations for 2017/18 output in Indonesia, Uganda, and Papua New Guinea, while increasing them in Nicaragua and Ethiopia.
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