Coffee supply and demand should be well balanced this year and next, leading to stable prices, executives of the International Coffee Organisation (ICO) said on Friday.
Global coffee production in 2006/2007 is estimated at 120 million 60-kg bags while consumption is seen at 118 million bags, ICO Executive Director Nestor Osorio said on the sidelines of a coffee fair in Italy's north-eastern coffee centre Trieste. "There are reasons to believe that the current balance will prevail next year," Osorio told Reuters.
He said an expected decline of production in Brazil next year was likely to be offset by a big harvest in Vietnam, though coffee there may have some quality problems.
Osorio said coffee consumption in traditional markets, like the United States and Western Europe was stable and in some countries, like Europe's import leader Germany and Austria was declining after demand has reached high levels or consumers have had quality problems. Ernesto Illy, Italy's 81-year old coffee patriarch and head of ICO's promotion committee, said recent medical studies have shown coffee had a positive impact on human health.
"Our task is to make people fall in love with coffee. For this we need perfect coffee beans," Illy said. Improving coffee quality by educating growers and increasing investment in technology would boost consumption not only in the traditional markets but also in the coffee-producing countries, ICO officials said.
For now, only Brazil, the world's biggest coffee producers, has made a breakthrough, with internal production doubling to 16 million bags from 8 million over past 10 years and targeting 20 million bags in 2010, Osorio said.
He said boosting internal consumption in producing countries and in new consuming countries like Russia and China - where annual demand was growing by 12-13 percent but volumes remained small - was essential to avoid possible oversupply situations like the one that depressed the market earlier this decade.
Osorio said he expected world coffee prices to fluctuate around current levels in the near term due to a balance between supply and demand. But ICO's Council President Mauro Orefice said prices were vulnerable to political instability in various coffee-producing countries and may therefore see upturns. He said that despite recent increases of Brazilian coffee prices European coffee importers have not yet started looking for alternative export markets and on the whole remained conservative in their supply sources.
"Coffee production is determined by specific geographical and climate factors. So the countries are always more or less the same. There are no new emerging exporters," Orefice told Reuters.
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