Sept. 6 (Bloomberg) -- Coffee roasters, which increased usage of cheaper robusta beans in the past two seasons, are unlikely to switch back to the arabica variety soon because of slowing economies, according to Macquarie Group Ltd.
Demand for robusta beans, used in instant coffee and espresso, increased by about 5 million bags in the current season and the last at the expense of the arabica kind, favored by Starbucks Corp, Macquarie, Australia's biggest investment bank, said in a report e-mailed today. Rising consumption will leave a robusta shortage of 900,000 bags in 2012-13 while the arabica surplus will be 2.2 million bags, the bank estimates.
"Robusta is still a good 70 cents a pound cheaper than arabica and with the economic climate being the way it is in the major consuming markets of Europe and North America, I think it will be very difficult for roasters to want to come back to a more expensive ingredient," Kona Haque, an analyst at the bank in London, said in a conference call with reporters today.
The price difference between the two coffee kinds would need to be below 50 cents a pound for at least a season before roasters opt to use more arabica again, she said. An increase in coffee consumption in emerging markets has also contributed to increased demand for robusta, according to Macquarie.
The crop in Vietnam, the world's biggest robusta grower, may fall 10 percent to 15 percent in the 2012-13 season that starts in October from 25 million bags in 2011-12, the bank said. A bag of coffee weighs 132 pounds.
Arabica coffee is now $1.586 a pound and robusta is $1,999 a ton (91 cents a pound).
Eugene.
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