World production is projected at 169.3 million bags in 19/20, down 3% from the previous season. Consumption is estimated at 166.4 million bags, an increase of 1% over the previous cycle. Even so, USDA projects a global surplus of 2.97 million bags. Remember that the Department works with a business year starting in July and ending in June. In the previous season, the surplus stood at 9.88 million bags, driven by Brazil’s record crop.
Lower supply must cause exports to fall by 4%, reaching 135 million bags in the 19/20 season. Last season exports reached 140.6 million bags. Brazilian shipments must fall sharply, sending the external flow lower. In this scenario, global stocks were raised to 34.96 million bags (33.55 in the previous forecast). Even so, below the 35.42 million bags at the end of the 18/19 season.
The USDA’s report brings slightly more comfortable supply numbers, which may encourage some downward pressure on price levels when the bottleneck in the supply of milds is overcome. While the ICO already projects a deficit of 500,000 bags, the USDA still indicates a surplus. Different readings, at first, stem from the distinct business year period, but especially from distinct crop projections for Brazil. In any case, they both indicate that excess has decreased.