Coffee - The Market (Part 1 of 2) - The Economics of Coffee

The first interesting thing to note is how important a relatively small number of countries are to the supply situation for coffee. The top five countries accounted for over two-thirds (67.89%) of the worlds supply that year, and the top twenty account for over 90%. With 54.72% coming from South America and over 42% from Brazil alone because it had a particularly bumper crop in that year. This year by contrast a substantial decline of this years Brazilian Coffee crop is expected, and a downgrading of expectations to 107.1 million bags worldwide. This is because Brazils production is expected to fall from 51.6 million bags to 33.6 million bags.(See historical supply figures and forecasts for 2004 here) This is a massive difference, but is actually only roughly what the normal crop yields have been over the last five years (35.1 million in 2002 for example); and serves as an interesting example of how the supply of even a global commodity like coffee can ultimately hinge on a single countries crop. Below by counterpoint is a look at some demand figures for world coffee consumption. These are for 2001/2002 as the 2003 figures have not yet been finalised.