Rabobank, the Dutch multinational financial services company, has revealed that its executives have been toying with the idea of raising coffee price forecasts.
Speaking after conducting one of the biggest crop surveys ever completed, the bank stated that it believes the Brazilian coffee harvest for the 2016-17 season will fall short of current market averages.
It believes that Brazil, the biggest coffee growing country in the world, will produce 51.8m bags this term.
The average forecast made by the industry so far is that Brazil’s farmers will produce 53m bags.
“This is quite likely going to result in an increase in our price forecast…barring any further depreciation of the Brazilian real,” a Rabobank spokesperson said,
So, what is the reason for this lower-than-average prediction?
“The low robusta estimate is due to a very severe drought in Espirito Santo and irrigation restrictions,” the bank said in a statement.
It also cited a mealybug infestation as another primary cause for their negative projections.
Suggestions have been made that buyers should look towards other robusta-producing countries in order to fulfil quotas, something that is surely news to the ears of Vietnamese coffee producers who have had a tough time of it as of late.