Demand for coffee in non-producing countries shows recovery

In the first quarter of the year, demand for coffee in non-producing countries showed a healthy recovery, although there are signs of slowdowns in demand in Russia and China for the coming quarters, according to analysts from Rabobank.

Coffee disappearance, a term that indicates the amount of coffee non-producing countries are actually consuming and not packing for re-export, rose 6.9% in the first quarter compared to the same period a year ago. The European Union plus United Kingdom area saw a bigger increase, at 9%, while the United States jumped 4.6% and Japan 5.1%.

Rabobank said the numbers are still not great compared to pre-pandemic levels. In the first quarter, the result was only 0.6% higher than two years ago, Q 1 2020. Analysts said Russia's war in Ukraine and Chinese Covid lockdowns could affect coffee demand in those countries. They said high retail prices could hurt demand in Brazil, a top producing country, which is also the second largest global coffee consumer after the United States.

Rabobank projects a 25% fall in Russian coffee demand and a 50% fall in Ukraine's coffee use.

The global coffee supply balance is shifting from a deficit of 5.1 million 60 kg bags in 2021 to a surplus of 1.7 million bags in 2022 23 according to the bank.

In the top end of market estimates, the Brazilian production estimate for 2022 was 64.5 million bags.

Brazil's food supply agency, Conab, cut its crop view to only 53.4 million bags on Thursday.

In 2021, Rabobank reduced its view for the Colombian crop to 11.8 million bags, but expects a recovery of 13.4 million bags by the end of 2022 23.