Source: Public Ledger, customs data .... -13. Ap r-13. J ul-13. Oc t-13. J an. -14. Arbitrage. Arabica. Robusta. (¢/lb)
Coffee Market Outlook March 2014 Dr. Alan Bullion The Public Ledger
[email protected] +44 207 017 7508 www.public-ledger.com
Net Trade • Asia & Latin America biggest exporters • Europe & North America biggest importers
Source: Public Ledger, customs data
World Overview • Global coffee production up 50% since 1993 • Robusta closing gap on arabica 160,000 140,000 120,000
Total production Arabica Robusta
100,000 80,000 60,000 40,000 20,000 0
Sources: Public Ledger, USDA, ICO
Supply & Demand Chronic oversupply Fourth consecutive surplus in 2014? EU and US consumption growth slowing down RoW catching up
• • • • 160,000 140,000
Total production EU and US Stocks
Total consumption Rest of the world
15,000
Surplus/deficit
10,000
120,000 100,000
5,000
80,000
-5,000 20,000 -10,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2014
2013
2012
2011
(000 bags) Sources: Public Ledger, USDA, ICO
0
2010
2009
2008
2007
2006
2005
2003
40,000
2004
0
60,000
Production
Brazil • Huge production over recent years • Government intervention due to low prices 60,000 Production
Arabica
Robusta
50,000 40,000 30,000 20,000 10,000 0 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Vietnam • Expansion in planted area • Record coffee output 30,000 Production 25,000 Arabica 20,000
(000 bags)
Robusta
15,000 10,000 5,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011
2012 2013
Colombia • Tree renovation programme means smaller crops • Recovery under way • Stocks have come down to almost zero 14,000 Production
Stocks
12,000 (000 bags) 10,000 8,000 6,000 4,000 2,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Indonesia • Hit by bad weather • Potential for output growth 12,000 Production 10,000
Arabica
Robusta
(000 bags)
8,000 6,000 4,000 2,000 0 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Demand
Developed Markets • Growth in the EU and US is almost flat 160,000 Total production
Total consumption
2004
2007
EU and US
140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2003
2005
2006
2008
2009
2010
2011
2012
2013
Consumption - Asia • Asia is drinking more and more coffee 2,500 China
Indonesia
Vietnam
Malaysia
Thailand
2,000
1,500
1,000
500 (000 bags)
0 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Asia – per capita consumption • China has the most potential for growth 1.300 1.200
China
1.100
Indonesia
1.000
Vietnam 0.900
Malaysia 0.800
Thailand 0.700 0.600 0.500 0.400
Source: Public Ledger 0.300 0.200 0.100 0.000 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Brazil • Domestic demand on the rise, stocks falling 22,000 Consumption
Stocks
20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Russia 4,500 4,000 (000 bags) 3,500 Source: USDA 3,000 2,500 2,000 Rst,Ground Dom. Consum
1,500
Domestic Consumption 1,000
Soluble Imports
500 0 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
India 6,000
5,000
4,000 Imports
(000 bags)
Consumption
3,000
Production Source: USDA
2,000
1,000
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
Supply & Demand Outlook
By 2023… • • • • •
After 2016, output will struggle to keep up with demand World production to reach 190 million bags by 2023 Consumption to rise close to 200 million bags Traditional coffee markets will have a reduced market share Brazil and China will be among the top consumers 200,000 190,000 180,000 170,000 160,000 150,000 140,000 130,000 120,000 110,000 100,000
Production
Consumption
Price Forecast Neutral to bearish for robusta and arabica for next two seasons More bullish over the longer term Arabica’s premium over robusta to tighten further 300
Arbitrage 250
(¢/lb)
Arabica 200
Robusta 150
100
50
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
0 Jan-08
• • •
Thank you
Dr. Alan Bullion Principal Analyst/Special Reports Publisher
[email protected] +44 207 017 7508 www.public-ledger.com
