Barclays joined commentators forecasting a rise in arabica coffee prices, forecasting a weaker Brazilian harvest next year, as producers renewed an attack on "absurd" ideas of a stronger crop.

Barclays, which had foreseen weakness in New York arabica futures, which last month fell below 140 cents a pound for the first time since 2010 on a front contract basis, said that "there is potential for a rebound in prices".

The bank forecast a slightly lower world coffee harvest in 2012-13, of 144m bags, a rise of 6.4%, rather than the 8.4% increase to 146m tonnes expected by the International Coffee Organization.

It estimated the harvest in Colombia, the second-ranked arabica producer after Brazil, at 8.8m bags, up from the 7.7m bags in 2011-12, but well below the long-term average of 11m bags.

'Vulnerable to short-covering rally'

However, it also flagged as a supports to arabica futures the potential for a rash of position covering by hedge funds, which have built up a historically large net short position in New York futures and options, pegged by regulators at 26,137 lots as of December 18.

The data "show that a large speculative short position has built up, the most bearish since November 2003, and has left the market vulnerable to a short-covering rally".

Furthermore, it forecast a fall in Brazilian output in 2013, an "off" year in the country's cycle of alternate higher and lower producing years, if a relatively small decline, of 5.9% compared with the typical 15-20% drops.

"We expect Brazil's 2013-14 'off-year' crop to experience a smaller downturn than previous off-years as weather has been favourable for flowering coffee trees," Barclays analyst Kate Tang said.

"We expect coffee prices to be supported by an off-year crop in Brazil."

Talks on options

The comments come amid a dispute on prospects for Brazil's 2013 coffee harvest which has prompted an industry debate on coffee data, and the potential for market manipulation.

The Brazil-based Conselho Nacional do Café (CNC) producers' group, restated as "absurd" ideas of a rise in production in 2013 as floated by commentators such as exporter Terra Forte, which has pegged the harvest at 53.4m bags, thanks to the good flowering conditions.

Official crop bureau Conab has pegged this year's harvest at 50.8m bags.

The CNC said that it was working with government and exchange officials on the promotion of options as a tool for producer selling, a move which would offer "less space for speculation".