Coffee export earnings to hit record $16.5 billion

Coffee-producing countries are expected to earn a record $16.5 billion from exports in the 2010 calendar year because of rising prices, even as volumes decline, the International Coffee Organization said.

“The $16.5 billion is not definitive yet, it is still a forecast, but we are confident we will surpass the record this year,” Jose Sette, the organization’s acting executive director, said at a conference in Ho Chi Minh City today.

Supply problems in many producing countries have prevented exporters from taking advantage of a surge in prices, Sette said. Exports may fall to around 94 million bags this year, from a high of 97.7 million in 2008, he said. There is “simply no coffee to make available to the world market” in addition to current supplies, he said.

Robusta-coffee futures in London have jumped 44 percent this year, advancing to $2,098 a metric ton on Nov. 9, the highest level in more than two years, as rains delayed the Vietnam harvest. Arabica futures in New York soared to a 13-year high of $2.2145 a pound on Nov. 10 and have increased 54 percent this year.

The value of coffee exports in 2009 fell to $13.3 billion, compared with $15.4 billion a year earlier, according to the ICO.

The tighter coffee market will leave stocks of the Arabica variety “fairly low” entering the 2011-2012 season, VM Group said in a quarterly report published with ABN Amro on Nov. 30. Arabica production from Brazil, the world’s largest producer, is expected to decline as its trees “go into the ‘off’ period of their biannual cycle,” it said.

Brazil’s coffee production is subject to an alternating cycle, in which trees produce less every other year.

Shrinking Inventories

Coffee stockpiles in producing nations dropped to about 12 million bags this year, the lowest level since the ICO began keeping records in the 1960s, Sette said last month.

“As we go into the 2011 season with historically low world stock levels, and with Brazil entering its lower-yielding year of its biennial cycle, we fear that the global coffee supply shortfall will become very acute indeed,” Macquarie Group Ltd. said in a report distributed Nov. 26.

Coffee output for the 2010-2011 crop year in Vietnam, the world’s biggest grower of the Robusta variety used in instant drinks, will decline about 20 percent from the previous harvest of 1.1 million tons, Luong Van Tu, chairman of the Vietnam Coffee & Cocoa Association, said at the conference today.

“We have had both droughts and rains, and the unexpected rains lately have delayed the harvesting and affected the crops in many areas,” Luong Van Tu, chairman of the Vietnam Coffee & Cocoa Association.

The Vietnamese coffee harvest, which typically starts on Oct. 1, was delayed by at least a month because of rain.- Bloomberg

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