The world coffee market will swing to a deficit of as much as 10 million bags next year from a surplus this year as demand growth outstrips production, said a growers group in Colombia, the third-biggest producer.
Global coffee output will exceed demand by 6-7 million bags this year as Brazil, the world's largest producer, is in the more productive phase of a two-year cycle, said Juan Lucas Restrepo, commercial manager at the National Federation of Coffee Growers of Colombia. Lower Brazilian output as demand grows 2 percent will cause the shortfall next year, he added. A bag weighs 60 kilograms (132 pounds).
A drop in supply and a rise in demand only leads to one end, rapid price increases. There is also time to blame the supply problem on the credit crises.
`The credit crunch limits the availability to exporters and cooperatives of working capital,'' Restrepo said. ``We might see problems in coffee supply if it persists.''
I can only image what a supply problem might due to productivity as people have trouble getting their favorite caffeine kick. Of course there is always a silver lining, maybe the tea producers and the soda producers will see increases in demand as people shift their method for caffeine consumption.
The full story is at Bloomberg.
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