The International Coffee Organization anticipated that the global coffee market would post a 3.10 million bag deficit in the October-September season.
The ICO pegged 2021/22 global coffee production at 167.20 million of 60.00 kg bags. This figure represented a 2.10% decline year-over-year.
Meanwhile, bean consumption reported an annual jump of 3.30% to 170.30 million bags.
The organization also mentioned that global exports of the commodity in February were 9.88 million bags. It edged down from 10.24 million bags a year ago.
Exports reached 47.18 million bags in the first five months, a 3.00% YoY decrease.
This downbeat report came after Brazil’s top bean producer recently harvested a smaller, off-season crop.
In addition, the inter-governmental body warned that the market balance might shift significantly.
This caution is due to a potential downturn in the world economy amid the Russia-Ukraine conflict.
The ongoing geopolitical crisis caused increased production costs and reduced consumption.
Brazil continues to grapple with issues with the availability of shipping containers, even though these have improved in recent weeks.
The country received its last wave of much-needed fertilizer from Moscow on Wednesday.
Dozens of Russian vessels are carrying fertilizer headed to Brazil, with a final ship unloading on May 5. This is before supplies drop due to the escalating war.
After that, the South American nation must look for an alternative for 85.00% of its fertilizer imports.
In the stated case, the shortfall of soil nutrients could potentially hurt harvests in the biggest grower of crops.
This conflict could trigger higher food costs globally, given the importance of the state to world crop supplies.
Analysts explained that the war impact on Brazilian imports would be remarkably higher in the second half of the year.
Coffee futures flat on Wednesday
Accordingly, coffee contracts for May 22 delivery slightly rose 0.30% or 0.01 points to $2.31 per pound.
In the United States, pandemic health restrictions ease which will be positive for social gatherings and coffee demand.
Meanwhile, the reduced dry condition in Brazil is adverse to bean prices. The rainfall in the Minas Gerais area, 30% of the country’s arabica crop, was 163.00% of the historical average.
This year, drought and recent frost events have devastated the South American coffee crop.
The harsh environmental conditions have curbed the growth potential for the crop over the next two years.
Previously, Brazil’s 2021 arabica coffee production fell to 31.40 million bags. It is 36.00% down from 48.80 million bags in 2020.
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