Coffee market to stay firm on high consumption, low supply

Demand for coffee in the global market will continue to outstrip supply in coming months because of rising consumption and lower stocks, trade sources said.

?Coffee stocks in the global warehouses will not match raising demand,? said J Manjunath of Bangalore-based Sivadarsh Exports. He said traders might stock and sell the commodity to fetch higher rates.

?Rise in world consumption and lower production in some important countries have supported a firm market, particularly in the case of Arabica coffees. Stocks are at low levels both in exporting and importing countries, since they are being drawn down to offset the reduction in supply,? said Nestor Osorio, executive director International Coffee Organisation (ICO), in his latest report.

Stocks in importing and exporting countries were estimated to be around 22.6 million bags at the end of December 2009 compared to 25.6 million bags at the end of September 2009. Certified stocks at London and New York futures markets are continuing to fall, Osorio said.

World consumption in calendar year 2009 is estimated at 132 million bags compared to 130 million bags in 2008. Based on this, the world?s biggest consuming countries are the US (16.2% of total world consumption), Brazil (13.9%), Germany (6.7%) and Japan (5.6%).

In exporting countries, Brazil ranks first followed by Honduras, Venezuela, Costa Rica and Dominican Republic in per capita consumption. The per capita consumption increased to 5.72 kg in 2009 in Brazil from 4.96 kg in 2005 while it increased to 3.77 kg from 2.00 kg in Honduras. It currently stands at 3.52 kg in Venezuela. In Costa Rica, the per capita consumption reduced to 3.22 kg from 5.04 kg while it declined to 2.28 kg from 2.38 kg in Dominican Republic.

In importing countries, Luxemburg tops in the list followed by Finland, Norway, Denmark, Switzerland, Sweden and Germany. The per capita consumption increased to 13.88 kg in 2009 from 11.66 kg in 2005 in Luxemburg while it stood at 11.98 kg in Finland. In Norway and Denmark, the current per capita consumption stand at 9.00 kg and 7.90 kg, respectively. Switzerland, Sweden and Germany have touched 7.68 kg, 7.38 kg and 6.49 kg, respectively.