The global coffee supply-demand balance will swing from deficit to surplus this year, but the world may face a production shortfall again in three to four years as consumption grows, UK analyst CoffeeNetwork said. The analyst sees 2004/05 production of 119.7 million 60-kg bags compared with consumption of 115 million.
Demand was 113.4 million last season, above output of 108.5 million.
Although this year's surplus is dwarfed by the 2002/03 surplus of 11.5 million, stock levels are a cause for concern among producers at about 43 million bags going into the 2004/05 season.
"Stocks remain at an extremely high level...unless there are severe weather problems in key producing nations in coming years then there is little chance of diminishing the huge stocks by the end of the decade," analyst Andrea Thompson said in the report.
However, a rise in consumption to 120 million bags in three to four years could allow the world to absorb production, even during a year of strong production in Brazil.
The Latin American country's next big crop year is 2006/07, when there might be only be a marginal production surplus, Thompson said.
The world could then see two consecutive years of global production deficits in 2007/08 and 2008/09 for the first time since the mid-1990s.
World coffee prices have gained almost a third in value since the end of October on fund buying and talk of a dip in Brazilian production for 2005/06.
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