WORLD COFFEE PRODUCTION TO FALL TO 170.3 MLN BAGS IN 2019/20

摘要

World coffee production is projected to drop to 170.3 mln 60-kg bags in 2019/20 from an unprecedented 174.4 mln the year before. However, that would still be the second-largest crop ever and the biggest production level ever in a Brazilian off-year. Making matters worse, the market is already zooming in at prospects for a 70+ mln bag crop in Brazil in 2020/21, which would most likely mean that a new output record is on the cards for that season. The situation is not being helped either by the fact that Brazil's currency is still trading close to historical lows, which makes life easier for Brazilian producers (as it increases returns in local currency from dollar-denominated coffee sales) and reduces the need to curb production. That said, it is nosurprise that prices are still within reach of arabica's 13-1/2-year low and robusta futures' 9-year-low hit in May. This means that prices are below the cost of production for almost all of the world's producers, which has affected farmers' ability to buy crop inputs and apply good crop care for the 2019/20 crops. However, the reduction in global output resulting from this will most likely not be sufficient to put the market onto a better footing. Worse may therefore yet to come pricewise for the world's coffee producers.