Can we keep up with demand?

There may have been a dip in coffee prices last week on the ICE Futures Exchange when some fears about the Brazilian climate were alleviated, but that hasn’t stopped some people within the industry to issue new words of warning: “The world cannot afford to keep looking only at Brazil,” said Roberio Silva, the executive director of the International Coffee Organization (ICO).

Speaking earlier this month, James Cordier of the Liberty Trading Group attempted to dispel the prospect of Brazil, the world’s largest coffee producing country, suffering from successive prolonged and potentially damaging dry spells.

“The idea that the coffee crop would be weighed down by dry weather conditions is just incorrect. The drought is far behind us,” he commented.

But since then, other entities have had their say: Conab, the Brazilian crop agency, predict that production levels will tread water this year; The National Coffee Council believe that harvest could well be lower. Until the beans are picked and packed, it’s likely to be a crapshoot focused on the South American nation.

What makes these comments interesting, specifically Silva’s plea to widen the industry’s field of vision, is that demand of the crop has been predicted to rise by a quarter over the next five years.

According to the ICO global demand – fuelled by the rise in popularity of coffee in emerging, but potentially vast markets – is expected to jump beyond 175 million 132lb bags by 2020. The current yearly total the ICO say is just shy of 142 million bags.

“Consumption is increasing as societies in India, China and Latin America continue to be westernised,” Silva noted.

Other large-scale coffee producing nations such as Indonesia, Vietnam and India will be forced to keep up with demand as well as pick up any potential gaps caused by Brazil’s fluctuating harvest. The question is can they if needs dictate? Apparently not, that’s the opinion of one U.S based commodity consulting firm.

Like we said earlier, it’s all a shot in the dark at this stage. We’re not sure anybody really knows!