Global coffee prepares for record Espresso-bean jolt

SINGAPORE: Record robusta harvests in Vietnam and Brazil and potentially the biggest jump in Indonesian output in 16 years are boosting supplies of the coffee used in instant drinks and espressos as slowing economic growth threatens demand.

Production may climb for a fourth year, gaining 2.3% to 55.98 million bags (3.36 million tonne) in 2011-2012, Rabobank International predicts. More supply will create the biggest glut in at least four years, according to Macquarie Group.

Prices that already fell 9% this year will drop a further 8.5% to $1,750 a tonne by June 30, the lowest level since October 2010. Robusta surged 62% in London trading in 2010 as record demand created the first shortages in at least three years, according to Macquarie.

Supply is now expanding amid mounting concern that Europe’s debt crisis will derail the global economy. Coffee sales fell for the first time in seven years in 2009 as nations contended with recessions, according to Euro monitor International, a London-based esearch group.

“We have record world production and I’m not optimistic on demand,” said Judith Ganes-Chase, a former Merrill Lynch analyst who is now the president of Katonah, New York-based J. Ganes Consulting. “We’ll probably need to say goodbye to the bull market for a while.”