GLOBAL – Fortis forecasts a 3.1 million bag surplus in current year

MILAN – Estimates released by Fortis say that world production of arabica and robusta will reach a global surplus of 950.000 and 2.14 million bags respectively in coffee year 2006/07. The Dutch bank pegs the 2006/07 arabica crop at 73.25 million bags, ahead of a demand of 72.30 million bags. The robusta output is estimated at 46.64 million bags, against a global demand of 44.50 million bags.
In the report, Fortis explains that, owing to the low level of global stocks, arabica supply will be much more limited in 2007/2008 than in the previous crop, especially by the fact of the Brazilian crop being lower. The bank pointed out that robusta production must also be adjusted owing to the low level of stocks in 2005/2006, but at a lower scale compared to arabica.
“In spite of the expected surplus of the global coffee market of 3.09 million bags, we have entered the 2007/08 season with many months of weather uncertainty ahead (…) and historically low levels of carryover stocks”, said the institution. In view of that, Fortis evaluated that the commodity is expected to attract a firm interest in other participants, besides commercial companies, in the second semester of 2007.
The report also showed that the 2007/08 crop of robusta is unlikely reach the record broken in the previous cycle. “Under normal weather conditions, the 2007/08 production of Vietnam must not outdo 18 million bags,” the Report said.