International Coffee Organization forecasts 9.5% drop in production

May 24, 1998|By BLOOMBERG NEWS

LONDON -- Global coffee production is expected to fall 9.5 percent in the year ending Sept. 30, after Latin American farmers harvested smaller crops, according to a report by the International Coffee Organization.

Coffee output is seen falling to 91.3 million 60-kilo bags in 1997-1998, from 100.9 million bags last year, the London-based ICO said. The drop is "attributable mainly" to lower yields in Latin America, the report said.

Production in Brazil, the world's largest grower, fell 8.7 million bags to 18.9 million bags in 1997-1998, while Colombian supplies dropped 400,000 bags, the ICO said.

Brazilian production is expected to recover in 1998-1999, when the country's farmers are expected to harvest 31.2 million bags, the ICO said. But the impact of Brazil's crop on world prices is expected to be offset by falling output in Colombia, Indonesia and Central America, the report said.

In Indonesia, Asia's largest coffee producer and the third biggest grower overall, production is expected to drop to 4.6 million bags in 1998-1999, from 6.8 million bags in 1997-1998, said the report. Indonesian coffee plantations have been some of the worst hit by drought related to the current El Nino weather pattern.

Demand was little changed in 1997. Coffee consumption fell to 99.1 million bags in the last calendar year, from 99.5 million bags in the previous 12-month period, the ICO said.

In the United States, the world's largest coffee consumer, demand for coffee dropped to 17.8 million bags in 1997 from 18 million bags in 1996, the report said.

The fall in U.S. consumption may have been the result of an increase in retail prices for coffee, which surged 38.5 percent in 1997, the ICO said.

Retail prices also gained in Europe. Prices rose 14.65 percent in the United Kingdom, by 8 percent in the Netherlands and by 29.8 percent in Finland.

Pub Date: 5/24/98

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