USDA’s Biannual Report: Predicted Brazil Shortfall Offset by Gains Elsewhere

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In its biannual report on world coffee supply released last week, the USDA is predicting increased production levels in several of the world’s key growing regions that will offset an anticipated shortfall from the world’s largest producing country, Brazil.

In total, the USDA expects the 2015/16 crop season to result in a relatively modest 600,000 bags over the previous year, to 150.1 million bags produced globally. The USDA report predicts a robusta decline of 3.7 percent to 3.7 million bags in Brazil, where Arabica output is also predicted to decline by 1.2 million bags to 36.1 million.

In the world’s two largest consuming regions — the European Union and the United States — these projected declines are significant in that Brazil accounts for at least 30 percent of coffee imports in each. However, the USDA is predicting record-high outputs in Indonesia and Honduras, as well as a Robusta recovery in Vietnam, which helps offset the Brazilian shortfall.

Here are some key predictions from the USDA’s December report, which annually follows a June report with new predictions and revisions.

Brazil

• Brazil’s Robusta harvest is forecast to decline 3.7 million bags to 13.3 million. Arabica output is forecast to fall 1.2 million bags to 36.1 million on lower yields following January’s dry growing conditions in Minas Gerais and Sao Paulo. The combined Arabica and Robusta harvest is forecast down 4.9 million bags to 49.4 million. As a result of reduced supplies, bean exports are expected to drop 3.1 million bags to 30.0 million and ending stocks are forecast to decline 4.2 million bags to 5.2 million.

Vietnam

• Vietnam’s production is forecast up 1.9 million bags to 29.3 million on higher yields in most growing regions.
• Although farmers reacted to low prices last year by reducing sales and building stocks, bean exports are now forecast to jump 6.3 million bags to 26.7 million, drawing stocks 1.6 million bags lower to 4.2 million.

Colombia

• Colombia’s production is forecast to rise marginally to 13.4 million bags as the rust-resistant replanting program that was conducted over the last several years combined with normal weather conditions to maintain strong output.
• Rust initially affected as much as 40 percent of the planted area but has since declined to less than 5 percent.
• Bean exports are forecast to gain 150,000 bags to 11.5 million on higher shipments to the United States and Europe.
• Colombia is expected to rely on imported beans from Ecuador and Peru for just 10 percent of consumption, down from nearly 90 percent a few years ago.

Indonesia

• Indonesia’s production is forecast to gain 1.8 million bags to a record 10.6 million, driven by a rebound in Robusta output.
• However, below-average rainfall lowered yields slightly for the later-blooming Arabica trees, for which production is forecast down 100,000 bags to 1.3 million. Bean exports are forecast to rebound 400,000 bags to 5.5 million on gains to the EU while soluble exports are expected to spike 700,000 bags to 2.6 million primarily on strong demand from the Philippines.

India

• India’s production is forecast lower by 100,000 bags to 5.3 million on slightly weaker yields in Karnataka, the largest coffee producing state.
• However, higher carrying stocks are expected to provide ample supplies for exporters to increase bean shipments 300,000 bags to 3.5 million.

For more information, visit this USDA resource page and scroll down to the “coffee” report.