Brazil's coffee output, which some have forecast at a record
this year, may actually fall, breaking a long-term trend, officials said, giving
weight to fears which have prompted a surprise rebound in prices of arabica
Conab, the Brazilian crop bureau, in its first estimate for Brazil's
2014 harvest pegged it at 46.53m-50.15m bags.
The estimate, which followed an industry survey, raises the
potential for a drop from last year's harvest, which it pegs at 49.15m bags, and
is a far cry from figures of 60m bags common in the market earlier in the year
as Brazil's plantations enjoyed apparently ideal growing conditions.
Indeed, 2014 is an "on" year in Brazil's cycle of alternate
higher and lower output years, reflecting – albeit waning – dynamics in the
harvest of arabica beans, which represent the bulk of the coffee crop, and of
which the country is by far the largest producer.
Not since 1999-00 has coffee output in an "off" year beaten
that in the previous "on" year.
However, the forecast follows mounting market talk that earlier
production estimates may prove too optimistic, with Somar Meteorologia this
week cutting its crop forecast by 3m bags to 51m bags, citing the strongest
December rains in 90 years in Brazil's coffee belt.
Volcafe on Monday also estimated Brazil's coffee output at
51m bags, citing "disappointing fixation of flowers... due to high productive
stress from two large crops in a row, despite textbook weather".
A harvest at this level would be insufficient to cover
demand, with Volcafe saying that, on a global level, "our 2014-15 statistical
balance becomes a deficit of around 5m bags, coming after two years of
statistical surplus in 2012-13 and 2013-14".
Such concerns have driven up New York arabica coffee futures
by more than 9% so far in 2014.
Care must be taken in comparing bean forecasts, with some
commentators, such as the US Department of Agriculture, believing that Conab
routinely underestimates Brazilian coffee production.
Volcafe pegs Brazil's coffee output in 2012-13 at 57.2m
bags, 8.0m bags above the Conab figure.
Conab said that the threat of lower Brazilian coffee output
this year reflected indeed the prospect of a lower arabica crop, which would at
best reach 37.53m bags, down more than 700,000 bags year on year, with a
potential fall of 3.2m bags.
The agency blamed the fall in part on a "lower planted area",
reflecting the drop in prices to levels, in many cases, below the cost of
Overall coffee area, including that set aside for conilon (robusta)
coffee, will fall 61,000 hectares to 1.96m hectares.
The agency also highlighted efforts to iron out the two-year
cycle in arabica bearing fruit, and noted the impact of "adverse weather
conditions, such as frost that hit the Paraná in 2013".
In the main growing state of Minas Gerais, Conab noted the "occurrence
of continuous rainfall throughout the month of December", which had hampered farmers
from, for example, fertilizing crops.
However, with rains also potentially boosting growth, it was
too early yet to assume crop damage.
New York coffee futures for March, which had posted small losses before the report, stood up 0.1% at 121.05 cents a pound at 07:00 local time (12:00 UK time).