In recent months we have posted stories on the continuing unprecedented (in our lifetime) quiet sun and the eruptions of Alaska’s Mt. Redoubt.
Believe it or no both may be having an effect on the cost of coffee in the months ahead.
THE SOLAR FACTOR
The sun correlates very strongly positively with coffee production and negatively with coffee prices.
This is because as we have seen an active sun outputs a little more energy, more ultraviolet which cause warming in the atmosphere through ozone chemistry, and through the diffusion of galactic cosmic rays which normally cause increased low clouds through ion-mediated nucleation. Less cosmic rays mean less clouds, more sun. The opposite happens when the sun is quiet as it has been the last few years.
During solar minimum there tends to be unusually wet and cloudy conditions in Columbia, Central America, the coffee regions of central and northeast Brazil and an erratic monsoon in southeast Asia and India.
El Salvador's 2008-09 coffee production was 8.7% lower at 1.463 million bags for Oct. 1 to March 31, the Salvadoran Coffee Council. Honduran coffee exports for the 2008-09 season through April 15 were down 15% from the year-ago period to 1.521 million bags, the Honduran Coffee Institute. The 2008-09 harvest is behind last year's pace due to adverse weather that delayed picking. Furthermore, the program to replace old trees currently being implemented in Colombia and the reduction in fertilizer use as a result of high prices have contributed to lower production of Colombian washed Arabicas.
The Indian and Vietnam (world’s second largest coffee producers – mainly robustas) crops also were a disappointment.
2009/10 will be affected by lower production in Brazil which will be in the off-year in its biennial production cycle. In accordance with the Arabica production cycle in Brazil, an abundant crop in one year is followed by a smaller crop in the next. For crop year 2009/10, the Brazilian authorities have forecast a total crop of between 36.9 and 38.8 million bags, down 25 from 45,992 million bags this past year.
Much if the formerly held reserves of coffees by individual producing nations has been reduced to take advantage of improved prices and warehouse supplies are down.
According to the International Coffee Organization (ICO), total production for crop year 2008/09, which is affected by the situation in Colombia, Central America and Vietnam, is estimated at around 127 million bags. While it is still too early to forecast world production for crop year 2009/10, it is expected that there will be a significant decrease in supply in relation to current levels of demand.
World consumption in calendar year 2008 is estimated at 128 million bags, compared to 126.5 million bags in 2007. As yet there is no indication of any significant impact of the world economic crisis on consumption. However, changes in the behavior of consumers, particularly in the emerging markets of Eastern Europe, are likely.
COMPLICATED BY MT. REDOUBT
High latitude volcanoes historically have historically led to a weakening of the Asian /Indian wet monsoon. This may help explain the erratic monsoon last year (with Kasatochi). Mt. Redoubt may do the same this year (greens and yellows are dry). This could again affect India and Vietnam.
WSI has an ag service which provides global ag monitoring and forecasting with full access to all model data including the most complete European global operational and ensemble suite available anywhere.