Colombian growers have cut their forecast for coffee production in the world's second biggest grower of arabica beans, after poor weather continued to blight output in the first three months of the year.

The National Federation of Coffee Growers cut from 5.15m bags to 4.5m bags its output forecast in the first half of 2010.

The reduction followed a slump to 1.8m bags in production in the January-to-March period, a slide of 28% on the same quarter last year which was itself considered a poor one for output.

Inclement weather, marked both by spells of drought and heavy downpours, coupled with a plantation renewal programme which has increased the proportion of juvenile and unproductive trees, cut output by more than 30% to 7.8m tonnes in calendar 2009.

Well behaved blooms

The data comes at a key time in the Colombian coffee calendar – start of the mitaca, or mid-year, harvest, during which production has historically peaked at well over 1m tonnes a month.

Growers were upbeat over "the good behaviour of the blooms", and the likely increase in yields brought by greater applications of nutrients.

"The basis of our optimism is the excellent weather conditions and the 40% increase in fertilizer use," Luiz Munoz, the federation's director, told the Portafolio newspaper.

The federation's decision to leave its forecast for full-year production unchanged at 11m bags, implying a near-full rebound from the 2009 slump, limited the impact of the data on markets.

Arabica coffee for May delivery closed 0.65 cents lower at 131.85 cents a pound in New York.

Stockpiling plan

Investors also shrugged off news that Vietnam had taken another step towards encouraging the building of stockpile of robusta beans, of which it is the top producer, in an effort to prop up prices.

A government directive on Tuesday, offering subsidised loans, said exporters would purchase 3.3m bags of coffee, equivalent to 200,000 tonnes, by mid-July – a programme which, at current prices, would cost about $260m.

"It remains to be seen how effective this programme will be in raising prices, as meanwhile the Trade are struggling to get performance on existing contracts," Ralph Hawes at Sucden Financial said.

May robusta beans closed up £2 at £1,348 a tonne in London.