The Indian coffee industry is optimistic that the slowdown in the US will not affect demand for the beans, trade sources said. The sentiments of domestic and export coffee players are high, after International Coffee Organisation (ICO) executive director Nestor Osorio said recently that he does not expect consumption to slow, despite growing indications the US could be heading into recession, a Coffee Board official said.
Panic over a possible US recession has raised expectations that demand for a few commodities like steel, copper, and oil could fall in coming months, leading to price crash.
But coffee is expected to withstand and witness an upward price movement in 2008 too, as most of the countries are developing their domestic market, following their bitter experience due to the weak dollar in 2007, industry sources added.
In addition, Osorio had also reiterated ICO?s forecast that coffee consumption should rise to 125 million bags in 2008 from 123 million bags last year, raising hopes of coffee farmers across the world involved in harvesting.
Although crop year 2007-08 is still underway in many exporting countries, ICO?s latest report indicated total production of around 116 million bags, representing a decrease of 7.4% compared to total production in the crop year 2006-07. The volume of opening stocks in exporting countries for the crop year 2007-08 stood at 25 million bags compared to 29 million bags at the beginning of the crop year 2006-07.
The ICO report also said if the annual growth rate of 1.5% to 2% is maintained, world consumption will rise from 123 million bags in 2007 to more than 125 million in 2008. Further, the preliminary estimate by ICO indicated the crop year 2008-09 would witness a production of 123-126 million bags, when compared to 116 million bags in 2007-08.