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Featuring the latest news on the coffee industry and business insight from senior members of the Bennetts team.

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Industry News.

Prolonged uncertainty regarding Brazil’s annual production continues to cause volatility on the ICE, and global production estimates are released from the USDA.

The prevailing uncertainty and lack of any substantial updates surrounding Brazil’s current crop of raw green coffee continues to prompt market-wide volatility, with the price of coffee fluctuating between 10-15 cents per lb during the last week. This level of influence that speculation and uncertainty currently have on the market is almost unprecedented, according to the ICO. After output estimates from Brazil are reported, it is expected that the widespread speculation and uncertainty will begin to cease. However, we can expect similar levels of turbulence for at least the next 12 weeks, as we progress through the traditional frost period in Brazil.

The United States Department of Agriculture (USDA) has released its most recent estimates for worldwide annual raw green coffee production. They are forecasting a decline of 1.5 million bags for the upcoming 2014/15 crop year, estimating annual production to be 147.8 million bags. Much of the decline has been attributed to prolonged drought in Brazil and the outbreak of leaf rust in Central America. However, due to widespread response efforts, the impact of the outbreak has been curbed to an extent.

Brazil’s output is expected to drop for the second consecutive year, declining to 49.5 million bags and breaking the biennial cycle for the first time in over two decades. Prolonged drought and above-average temperatures in Minas Gerais and Sao Paulo states have been attributed to the decline,which has adversely affected the development of the beans.

Colombia’s raw green coffee production output is estimated to increase by 1 million bags, up to 12 million for the upcoming crop year. Steady growth is expected to continue, following the below-average output that has plagued the origin for the past seven years due to the spread of leaf rust, coffee borer beetles and prolonged adverse weather conditions in growing regions. Aggressive renovation programs were implemented to respond to the outbreaks, and it seems these are beginning to come into fruition.  

After two years of declining output of raw green coffee due to fungal outbreak, Mexico and Central America are estimated to increase production by 870,000 bags, escalating their total output to 16.2 million bags. Honduras is predicted to increase by 400,000 bags, totalling 5 million; El Salvador by 175,000, totalling 675,000; and Guatemala by 200,000 bags, totalling 3.6 million. Costa Rica’s output is expected to increase to 1.6 million bags, according to the origin’s national coffee institute ICAFE. These increases have been attributed to the maturing of trees planted through renovation schemes, and control measures implemented by growers.

For the second consecutive year Indonesia’s production output of raw green coffee is estimated to decline to 8.9 million bags, a drop of 600,000 bags, due to excessive rain hindering cherry development.

Sources: USDA, DRWakefield, ICO.

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