Coffee Demand Rises but Remains Below Pre-Pandemic Levels – Report by Reuters

By Marcelo Teixeira

Demand for coffee in non-producing countries demonstrated a strong recovery in the first quarter of the year, although concerns about potential slowdowns in demand from Russia and China have emerged, according to analysts from Rabobank in a recent report.

The report highlighted a 6.9% increase in "coffee disappearance," which refers to the amount of coffee actually consumed in non-producing countries—rather than being packed for re-export—compared to the same quarter last year. Notably, the European Union and the United Kingdom experienced a larger increase of 9%, while the United States saw a rise of 4.6%, and Japan recorded an increase of 5.1%.

However, Rabobank noted that these figures are still modest when compared to pre-pandemic levels, with the first quarter’s results being only 0.6% higher than those from two years ago.

The analysts pointed to the ongoing conflict in Ukraine and the impact of COVID lockdowns in China as factors that could negatively affect coffee demand in those respective countries. Additionally, high retail prices might also suppress demand in Brazil, a leading coffee producer and the second-largest consumer globally, following the United States.

Rabobank forecasts a significant decrease in coffee demand in Russia, estimating a 25% drop, while predicting a 50% decline in Ukraine’s coffee consumption.

In terms of global coffee supply, the bank expects a shift from a deficit of 5.1 million 60-kg bags in the 2021/22 season to a surplus of 1.7 million bags in the 2022/23 season.

The bank has maintained its production estimate for Brazil for 2022 at 64.5 million bags, which falls within the higher range of market expectations.

In contrast, Brazil’s food supply agency Conab has revised its crop forecast down to 53.4 million bags. Rabobank has also reduced its estimate for Colombian coffee production to 11.8 million bags for the 2021/22 season but anticipates a recovery to 13.4 million bags in 2022/23.