Java Boost

World coffee production could finally pull out of a three-year slide, according to predictions from the U.S. Department of Agriculture.

Warming temperatures and an epidemic of rust fungus have slowed Arabica coffee bean production over the last few years, but favorable weather this year will spur record crops in Indonesia and Honduras, the report said. Brazil's crop is set for more modest recovery due to dry conditions in two of its key growing regions. The outlook for coffee production in Vietnam is also looking good.

Overall, production is expected to increase by 6.4 million 60-kilogram bags in 2015 and 2016 compared to the previous year.

Getting Low

Despite the uptick in exports, global coffee reserves are likely to slip to a four-year low as overall demand increases.

With the ratio of demand to consumption slipping from 22.7 percent to 21.6 percent, low supply means higher prices by the end of this year. For now, news of a predicted global surplus has driven prices down.

Grinding Down

The USDA report also showed that coffee consumption in the U.S. has declined for the first time since 2009-2010, and predicted a slight drop of 300,000 bags. Meanwhile, Reuters reported that American spending on coffee is set to increase from $11.9 billion in 2014 to $13.6 billion in 2016.

Coffee market watchers said the decrease could stem from increasing use of single-serve brewing machines like Kuerig's K-Cups. The number of households using those machines increased from 15 percent in 2014 to a whopping 25 percent in 2015, according to a March report from the National Coffee Association.

Read More:

• Coffee: World Markets and Trade (USDA)
• Americans Are Drinking Less Coffee, One K-Cup At A Time (Reuters)
• World Coffee Stocks To Hit 4-Year Low, Despite Output Rise (AgriMoney)