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Re: Coffee Wake Up Call
In Response To: Re: Coffee Wake Up Call ()

Global coffee production is the same today as it was 5 years ago. There has been no net growth in global coffee production in 5 years. I am not aware of another Ag market whose production does not exceed what it did 5 years ago. Coffee is an oddity.

Vietnam production has been flat for 5 years as has Brazil's production. Anyone who looks at the chart of Colombia’s coffee production can see their growth has been decelerating at a rapid rate and looks to have just peaked.

Central American production including Mexico had production of 19.5 million bags 5 years ago and despite the recent improvement still remains only at 18 million.

There is nothing bearish about what has been going on with production. Exports have stayed strong due to destocking of the above ground supplies that were built up during the surplus years of 2010 to 2013.

That de-stocking is now complete.

Bottom line the whole coffee deal hinges on whether or not Brazil can deliver on a 60 million bag crop. Everything else is fairly immaterial.

It is going to be wild and volatile growing season in Brazil as any and all weather problems are going to be traded with vigor given the near record tight exporter global coffee stocks to usage ratio.

Any failure on the part of Brazil to deliver the big crop and a bull market of the ages will be upon is. For the coffee industry at large, I sure do hope Brazil delivers. The consequences if they don’t will be most destabilizing to the industry.

As far as China production goes it is a non event. They will be consuming 20 million bags over the next 15 years in our view and their production will not materially exceed that and most likely will be less than that.

Thus China will not be a major exporter of coffee anytime soon and will likely be a net importer at some point.

May God be with you.

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