Milan, Nov 4 - The world coffee market may see a surplus of over 10 million 60-kg bags next year if good weather in major producing countries drives global output higher, the head of Italian premium coffee roaster illycaffe said on Wednesday.
The world coffee output could rise above 140 million bags in 2010/2011 next year, well above a projected demand and up from 132-133 million bags expected in 2009/2009, illycaffe Chairman and Chief Executive Andrea Illy told Reuters.
"In 2010/2011, which should be a year of higher production in Brazil, and if it is confirmed, we would see a surplus of maybe more than 10 million bags," Illy said in a telephone interview.
"It would help rebuild stocks which were eroded in 2007/2008," he said.
Illycaffe which buys half of its green coffee from Brazil, expects coffee output in the world's biggest producer to rise above 50 million bags next season if the weather is good during the higher output phase of Brazil's biennial coffee cycle.
Coffee output in Colombia, the world's No.3 producer, should recover to 11.0-11.5 million bags next year, Illy said.
Coffee prices on international markets should remain fairly stable from now to year end, with the possibility of a short-term autumn rally, which would not bring any structural change, he said.
The markets may see a speculative trade period in March and April based on weather expectations in major producing countries but then, if crops are abundant, prices may fall in the second part of 2010, he said.
DEMAND TO PICK UP SLOWLY
Global coffee consumption should pick up its growth pace to 1.5-2.0 percent next year after economic crisis slowed it down to about one percent this year when it is seen at 130 million bags, he said.
"It's true that economy is picking up, but the recovery will be very slow. Unemployment will remain high and government, corporate and family debt will be high ... So we cannot expect a strong consumption growth next year," he said.
Coffee consumption in restaurants and cafes, which has suffered a blow this year with consumers switching to drinking cheaper coffee and drinking more at home to save money, would slowly recover next year, Illy said.
Gourmet coffee demand which "galopped in the past few years" is likely to remain low next year, he said.
Illycaffe, which sells its trademark 100-percent arabica blend in more than 140 countries, has been betting on new products such as iperEspresso coffee in capsules for home use, and on a chain of certified coffee shops to boost consumption of premium coffee, he said.
The Artisti del Gusto, or Artists of Taste, chain accounts for about a 1,000 cafes and bars in Europe and the United States where coffee sales are three times higher that those of other clients, Illy said.
Illycaffe supplies coffee and equipment to the chain members, trains personnel and supervises quality there, he said.