07 Aug 2019
The International Coffee Organisation ICO have reported that as against a global coffee supply of 168.77 million bags for the present October 2018 to September 2019 coffee year, that they estimate global coffee consumption to be approximately 164.84 million bags. This surplus supply estimate of 3.93 million bags for the present coffee year they add to the surplus coming from the previous coffee year, to estimate an overall 8 million bags surplus ahead of the forthcoming October 2019 to September 2020 coffee year.
One would speculate though that with global coffee supply for the coming October 2019 to September 2020 coffee year likely to be a deficit supply of approximately 2 to 3 million bags and global coffee consumption to rise by approximately 3 million bags during this coming coffee year, that the surplus supply indicated within the latest ICO report is not really that massive. It is nevertheless an indication of surplus supply and continues to support the prevailing bearish sentiment within the markets, which are presently further suffering from the negative nature of commodity markets in general.
The big question remains over the prospects for the forthcoming 2020 Brazil crop, which is very much a weather-related issue and while one would consider the frost season to be over, the focus has to be towards the prospects for the forthcoming spring and summer Brazil rain season for south east Brazil. Presently the conditions within the Pacific Ocean is seen to be neutral and with neither a El Niņo or a La Niņa in play and one cannot foresee either of these having any influence, but global weather is uncertain and any delay or extended interruptions during this rain season, would bring aggressive volatility to the markets.
In the meantime, there are many trade and industry players who presuming that there shall not be any weather issues due for Brazil, who have been forecasting a biennially bearing larger new crop for Brazil and in this respect, something in the order of the size of the previous 2018 crop. These forecasts for the present and with their indication for a surplus coffee supply for the 2020/2021 coffee year, adding to the prevailing bearish sentiment within the market.
« Back to index