Coffee output to dip next season - but not by much

World coffee production will fall in 2011-12 – but not by much, supported by Brazil, which is expecting a record harvest for what is an off-season in its two-year cycle.

Typically, world output suffers a notable decrease when Brazil, the top producer, enters its off-year, with the decline nearing 9m bags between 2006 and 2007, for example.

However, next season output will fall only some 3m bags from that in 2010-11 thanks to expectations of a bumper off-season crop in Brazil, the International Coffee Organization said.

At 43.5m bags, the Brazilian crop "is the highest ever recorded for an off year", the organization said. Brazilian farmers have attempted to reduce the production cycle through measures such as irrigation, fertilization and pruning.

The ICO's world estimate of a 130m-bag harvest in 2011-12 represents the second-higher output ever, after the current season's production.

Nonetheless, it is likely to fall - again - below consumption, which hit 134.0m bags in 2010 and which the ICO said "continues to grow steadily, despite the firmness in prices".

Better prospects

The organisation added that, besides Brazil, some coffee growing countries are "expecting increased production if climatic conditions remain favourable".

The current elevated coffee prices "will encourage improvements in the upkeep of coffee farms in many other countries despite increased production costs".

However, the ICO also forecast "further falls" in Indonesia's output, which continues to be dogged by the effect prolonged rains which interfered with flowering, besides testing the country's infrastructure.Indeed, Indonesia is widely expected to return to Colombia third place in world coffee producing countries.

Output in second-ranked Vietnam, which produced 18.5m bags in 2010-11, will likely "stagnate" next season, the organisation said.

Discount narrows

The forecast came as the ICO reported a rare fall last month in the physical price of arabica beans. In the case of Brazilian natural beans, the decline was the first in at least a year.

However, robusta beans continued to appreciate, by 3.9%, narrowing their historically large discount to arabicas, which are generally considered of higher quality.

On futures markets, arabica coffee for July delivery added 1.1% 267.95 cents a pound in New York.

London robusta beans, for July, eased 1.3% to $2,431 a tonne.

Source: http://www.agrimoney.com/news/coffee-output-to-dip-next-season---but-not-by-much--3250.html