World coffee demand is likely to outstrip supply in 2005/06, forcing producers and consumers to release reserve stocks and pushing up prices, a US commodities expert said on Saturday. Analysts said a drought in Vietnam, which cut its coffee production forecast for 2004/05 and increased demand for local coffee in Brazil, the world's biggest producer, would create a huge gap in coffee stocks on the international market. Judith Ganes-Chase, a commodities specialist at J. Ganes Consulting in the United States said coffee consumption was on the rise in Asian countries and in some producer nations.
"Brazil needs to produce between 40 to 41 million (60 kg) bags to meet their internal needs and global demand," she told Reuters in an interview in the Zambian tourist resort of Livingstone, 500 km south of the capital Lusaka, on the sidelines of an international coffee conference.
"In Vietnam there are concerns of drought which will cut the 2004/05 crop to between 14.5 million and 15 million bags from the initial forecast of 16.5 to 17 million bags in October," she said.
Officials said this week that coffee farmers in Daklak, one of Vietnam's major coffee producing provinces, were becoming increasingly desperate for water and some of the crop may be damaged or ruined.
"In the event of expected weather problems, there will be no further reserve (stocks) to meet demand, and demand will outstrip production," Ganes-Chase said.
She said the industry had underestimated annual global coffee consumption.
"I think the consumption baseline is actually higher and people have underestimated what consumption is for so many years. The ICO (International Coffee Organisation) puts it at 113 million bags but I think it will be reasonable to put it at 117 million bags," she said.
Comments
Comments are closed.