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Coffee Market Outlook March 2014
Dr. Alan BullionThe Public Ledger
[email protected]+44 207 017 7508
www.public-ledger.com
Net Trade• Asia & Latin America biggest exporters• Europe & North America biggest importers
Source: Public Ledger, customs data
World Overview• Global coffee production up 50% since 1993• Robusta closing gap on arabica
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Total production
Arabica
Robusta
Sources: Public Ledger, USDA, ICO
• Chronic oversupply• Fourth consecutive surplus in 2014?• EU and US consumption growth slowing down• RoW catching up
-10,000
-5,000
0
5,000
10,000
15,000
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Sources: Public Ledger, USDA, ICO(000 bags)
Surplus/deficit
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total production Total consumptionEU and US Rest of the worldStocks
Supply & Demand
Production
Brazil• Huge production over recent years• Government intervention due to low prices
0
10,000
20,000
30,000
40,000
50,000
60,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Arabica Robusta
Vietnam• Expansion in planted area• Record coffee output
0
5,000
10,000
15,000
20,000
25,000
30,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production
Arabica
Robusta
(000 bags)
Colombia• Tree renovation programme means smaller crops• Recovery under way• Stocks have come down to almost zero
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Stocks
(000 bags)
Indonesia• Hit by bad weather• Potential for output growth
0
2,000
4,000
6,000
8,000
10,000
12,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Arabica Robusta
(000 bags)
Demand
Developed Markets• Growth in the EU and US is almost flat
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total production Total consumption EU and US
Consumption - Asia
0
500
1,000
1,500
2,000
2,500
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
China Indonesia Vietnam Malaysia Thailand
(000 bags)
• Asia is drinking more and more coffee
Asia – per capita consumption• China has the most potential for growth
0.000
0.100
0.200
0.300
0.400
0.500
0.600
0.700
0.800
0.900
1.000
1.100
1.200
1.300
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
China
Indonesia
Vietnam
Malaysia
Thailand
Source: Public Ledger
Brazil• Domestic demand on the rise, stocks falling
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Consumption Stocks
Russia
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Rst,Ground Dom. Consum
Domestic Consumption
Soluble Imports
Source: USDA
(000 bags)
India
0
1,000
2,000
3,000
4,000
5,000
6,00020
01
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
ImportsConsumptionProduction
Source: USDA
(000 bags)
Supply & Demand Outlook
• After 2016, output will struggle to keep up with demand• World production to reach 190 million bags by 2023• Consumption to rise close to 200 million bags• Traditional coffee markets will have a reduced market share• Brazil and China will be among the top consumers
By 2023…
100,000
110,000
120,000
130,000
140,000
150,000
160,000
170,000
180,000
190,000
200,000
Production Consumption
Price Forecast• Neutral to bearish for robusta and arabica for next two seasons• More bullish over the longer term• Arabica’s premium over robusta to tighten further
0
50
100
150
200
250
300
Jan-
08
Apr-
08
Jul-0
8
Oct
-08
Jan-
09
Apr-
09
Jul-0
9
Oct
-09
Jan-
10
Apr-
10
Jul-1
0
Oct
-10
Jan-
11
Apr-
11
Jul-1
1
Oct
-11
Jan-
12
Apr-
12
Jul-1
2
Oct
-12
Jan-
13
Apr-
13
Jul-1
3
Oct
-13
Jan-
14
Arbitrage
Arabica
Robusta
(¢/lb)
Thank you
Dr. Alan Bullion Principal Analyst/Special Reports [email protected]+44 207 017 7508www.public-ledger.com
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