USDA raises global surplus to 10.08 million bags on 20/21
The USDA’s biannual report slightly corrected downward the world’s production in 20/21, which is currently projected at 175.50 million bags. Even falling, it is 4% above the 19/20 season, but below the 176.8 million bags reaped in 18/19. As a result, the current crop is no longer a record. USDA revised the 18/19 production upward.
Arabica production in 20/21 rose to 101.97 million bags, accounting for 58% of the world’s total. Robusta fell to 73.51 million bags, accounting for 42% of the total. This realignment continues to favor the appreciation of prices on ICE Europe against ICE US.
Production in Brazil was maintained at 67.90 million bags, which corresponds to a 12% increase over the previous season. Colombia’s production, on the other hand, benefited from favorable weather conditions and remains above 14 million bags.
In Central America and Mexico, rust continues to negatively impact production. But the more favorable climate and greater use of fertilizers mitigated the losses and allowed production to grow, now projected at 18.3 million bags in the region.
The expectation of a 7% decline in Vietnam’s output, due to the delay in rainfall and below-average moisture at the beginning of the production cycle. The low prices of robusta at the beginning of 2020 ended up discouraging irrigation (very high cost). In Indonesia, production was revised upward due to the better performance of arabica. The Asian origin must repeat in 20/21 the 19/20 production of 10.7 million bags.
Besides reducing the 20/21 world production to 175.48 million bags, USDA also made a negative adjustment in global consumption to 165.40 million bags. Consumption adjusts to the effects of the coronavirus pandemic. Thus, after the decline in the 19/20 season, the projection is for recovery in the 20/21 season. In this math, USDA raises the global surplus to 10.08 million bags in 20/21, above the 9.80 million projected in the middle of the year.
With that, stocks with growers at the end of the season are projected at 41.33 million bags (+12.8%). The stock-consumption ratio is around 25%. A very comfortable situation for buyers, which ends up smoothing the corrective potential in the international price curve.