You say you believe yourself to be more bullish than me - I wld say I'be never tried to make this a competition, so please be my guest :D
But during my almost 30 years of origin crop visits, reporting and independent research across the world I have never like to use terms either as being bullish or bearish, but do try to reflect on, report and base my own analysis on what I consider REALISTIC in terms of producing conditions on the ground.
Re your comments on statistics and Brazil, I entirely agree - with the only small note that because of the significantly reduced harvest last year in Brazil as for 2021 the overall world share fell to between 30-35%, so a bit less influence, and a significantly higher need for other countries to make up for this. But as you also recognizes, this is NOT happening and not even growers in Vietnam are expanding production any longer. Even top trade official at Volcafe and ECOM recognized this at the Santos Seminario in Guaruja last week where I attended.
And you are spot-on when you say that Brazil is the only producing country with a capacity to hold at least SOME stocks, even in Colombia and Vietnam - primarily because of huge scale of tiny growers with complicated infrastructure and economic limitations - have the capacity to hold any significant stocks that cld provide any significant buffer to world markets.
No other producing country not even in the Top-10 has the capacity for increasing production at any significant scale and more often than not are optimistic forecasts for how and where some production MAY be expanded falling very short of predictions and any lasting increase in outlook always takes MUCH longer than many would like to recognize, hence for the 12 months ahead;
--Colombia is already at BELOW 12M bags for the last month and with mitaca being much more negatively effected than main crop it is entirely unrealistic to expect more than 11-11.5 M bags at the most, i.e. 2-2.5M bags BELOW initial forecasts.
--Honduras 2021-22 harvest has ENDED at 5M bags, not only 1M bags below year ago but 2-2.5M bags BELOW optimistic forecasts.
--India and Indonesia continues to suffer irregular rains and will in best case scenario come in at about 4.5M and 11M bags respectively
--Vietnam is nowhere close to 30 or above, but will realistically end in best case scenario same as last year at about 29M. No crop expansion, and even worse, every year when farmers renovate they ONLY renovate between 1/3 to 2/3 of land with coffee, and continue to rather renovate with other crops all together. Yields in Vietnam are similar for coffee and cocoa, but cocoa prices have been SIGNIFICANTLY higher for most of the past 5-6 years and Vietnam's growers LIKE this outlook much better than coffee.
--Ethiopia largely stable at about 7M bags BUT not seing any new crop or expansions, and armed local conflict creating multiple problems.
--Uganda, one of the LAST remaining hopes for the world of coffee to get up to as much as 1M bags more in the course of 2022 has just reported that yr-on-yr exports through April are actually DOWN 24% for the 2021-22 harvest. Sure, there is always hope for 2022-23 and Uganda IS doing some good work on rising production mostly through improving yields BUT any new production from Uganda will MERELY compensate for only a PART of all the shortfalls in the rest of the world.
--Peru and Mexico, and to a large extend Guatemala is in the same boat, have entirely FAILED to produce any significant crop recovery since the rust-crisis started between 2011-2012 and are still seeing total harvest lingering about 4M bags, very far from the 6.5M record achieved by Mexico and Peru is about the same.
--A market report from Brazil published yesterday calculates that total world production in the 2022-23 harvest cycle (2023 crop for Brazil) is likely to fall by over 17M bags because growers, even in Brazil, are buying and applying even LESS fertilizer than in previous years.
So, GT, like you, even if I take the optimistic road and say surely it will not be THAT much of an impact we still have a VERY LONG road ahead and figures are simply NOT adding up to any comfort level for the market, especially because as you say "Brazil inventories will be at a minimum" and the local Brazil consumption is forecast to grow another 1.7% year ahead (ABIC last week).
"Remaining coffee stocks are Europe 12.0 mln , US 5.5, Japan 3.0, consumer stocks 20.5 mln bags" -- exactly GT, these are exactly the numbers we agree on, so not so far from each other as some of these exchanges may indicate and yes, that gives EXACTLY in a best case scenario 6 weeks worth of stocks to feed the world caffeine demand!! Demand which by the way according to the ICO is growing 3.3% in the years ahead, or the equivalent to a stunning 5.5M bags in new consumption. Just where is this coffee going to come from??
And even if cutting consumption by raising prices, it is highly unlikely that this will happen to the degree that consumers actually WILL reduce demand, coffee demand is one of THE most resilient and cheap luxury products, demand is highly inelastic AND no company in any coffee consuming country, producing or importing, will voluntarily start cutting back on his/her OWN business and market share just to please a growing supply deficit!!
The existing stocks ARE enough to get through 2022 and also part of 2023 - unless we have SIGNIFICANT new weather disasters, such as those already in the building in many countries but it is unlikely that even the 2023 harvest will bring anything REMOTELY close in sufficient volumes from Brazil or elsewhere to the balance. That is, unless, a major financing plan coupled with crop-insurance for growers is made available to growers worldwide, something I have called on the industry to look at since Sep/Oct last year. HAD this been made prior to the Ukraine war, many growers in Central America, main harvest Colombia, Mexico and Peru would have applied at least 1-2 round of fertilizer for the 2022-23 crop cycle, but this did NOT happen - no surprise there - and instead of getting at least a 2-3-4M bags recovery from that region by 1Q-2023, the window for flowering has now ended with even LESS fertilizer and therefore wholly predicteble that yields in this region will NOT increase next year. Game over. Prices WILL rise again and $JO market and #KC_ will enter unprecedented turmil.
Maja
23/24 has to be about rebuilding inventories, with potential crop issues the coffee drinker is facing a vey precarious situation!
If you do the work you will see that the situation can’t be any clearer!
By the way I am way more bullish than you are with regard to the price depending on upcoming developments! While you make very bold predictions they have to be backed u
on May 20, 2022, 6:52 pm, in reply to "