Asia to perform well in coffee exports

Asia to perform well in coffee exports

LONDON (Reuter): World coffee exports from Asia and the Pacific could grow to an estimated 17.4 million bags by 2004-05 from 11.93 million in 1994-95, a leading agricultural economist told a conference.

"All countries in this region have expanded their output ...but the stars of the region are clearly Indonesia and Vietnam," Michael Wheeler said.

Wheeler said that while Indonesia was the largest producer, "Vietnam is rapidly clawing its way up to be the third largest producer of robusta."

He was speaking during the London conference on "The coffee market in the next 10 years 1996-2005" organized by statistician F.O. Licht.

Wheeler also cited rapid growth for coffee production in India, Papua New Guinea and Thailand.

Wheeler said he expected exportable output in the key Asian markets of Indonesia, Vietnam and India to grow to 7.0 million bags, 4.5 million bags and 2.3 million bags by the year 2004-5.

This compares with estimated exportable production in 1994-95 of 4.8 million bags in Indonesia, 2.8 million bags in Vietnam and 1.8 million in India.

"Coffee production in Indonesia has more than doubled in the past 20 years from 3.1 million bags in 1974-75 to 6.1 million in 1994-95," Wheeler told the conference.

He added that China was one of the most interesting countries in the region.

"Coffee production is growing fairly rapidly and although the amount of suitable land is strictly limited, there continues to be enormous scope for further expansion," he said.

He estimated production in 1994-95 at 75,000 bags, growing to 350,000 by the year 2004-05.

Prices

Meanwhile, coffee futures prices plummeted in New York Tuesday to the lowest level in 16 months amid growing doubt the world's leading coffee producers would be able to stick to their current plan to limit exports.

On New York's Coffee, Sugar and Cocoa Exchange, the pace- setting December contract tumbled 5.15 cents to 119.05 cents a pound, wiping out gains racked up this summer after key producing countries agreed to curtail world exports.

Coffee prices have fallen by more than 20 percent since late August, when the prospect of supply cuts, coupled with fears of a drought in Brazil, lifted the market to a two-month peak of US$1.55 a pound.

But coffee drinkers shouldn't get their hopes up that their local supermarket or espresso bar will slash its prices just yet. Coffee retailers often lag far behind the futures market in adjusting their prices.

Leading U.S. roasters Maxwell House, Chock Full O'Nuts and Folgers lowered prices on most brands by 7 percent earlier this month, their first cut since last winter. Futures prices declined by about 17 percent during the same period.

"Everyone was anticipating that supplies would be really tight at this time, and that has not been the case," said Celeste Georgakis, first vice president for investments at Dean Witter.

Spooked by the wild price fluctuations of the past year, roasters have scaled back their purchases, keeping less inventory on hand, she said.

In addition, consumers cut back on their coffee intake this summer due to unusually warm weather in the United States and Europe, analysts said.

Worries that a drought would wither Brazil's coffee trees for a second consecutive year have faded, as scattered showers over the past two weeks signaled the start of the rainy season in key coffee-growing areas.