World’s coffee supply is ‘fragile,’ as El Nino curbs crops in South America

admin | March 22nd, 2016 - 5:04 pm

Coffee, which entered a bull market last week, may climb further in prices this year amid increasing concern that global supply will continue to shrink because of El Nino-induced crop losses in South America and Southeast Asia, according to traders and analysts at an industry gathering.

Worldwide demand may exceed output by as many as 4 million bags in the season that will start Oct. 1 in most countries, following a 4.8 million-bag deficit in the current crop year, according to a Miami-based Coffee merchant. A bag weighs 132 pounds, or 60 kilograms. Inventories in Brazil, the largest grower, will be the lowest in 15 years by June 30.

The world’s supply is very tight and fragile, one director said in an interview during the National Coffee Association’s three-day conference in San Diego, which concluded Saturday.

Arabica coffee for May delivery was down 2.1% at $1.3155 a pound Monday in New York trading, after three straight weekly gains through March 18 that saw an advance of more than 20% from a January closing low, meeting the common definition of a bull market.

Source:  jsonline.com, 3-21-16

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