US officials extended a run of improved Brazil’s coffee harvest estimates – which have been condemned by producers – siding with forecasters expecting an increased harvest this year.
Brazil, the top coffee-growing country, will produce 52.4m bags of the bean this year, an increase of 1.2m bags on the 2014 crop, the US Department of Agriculture bureau in Brasilia said.
The forecast is the highest yet seen by Agrimoney.com for this year’s harvest, topping a 51.9m-bag estimate last week from Volcafe, but comes amid something of a rising tide of forecasts for the crop, with Mercon late in April pegging it at 50.3m bags, and Marex Spectron at 49m bags.
Conab, the official Brazilian crop bureau, currently sees it at 44.1-46.6m bags – although the market is keenly awaiting an upgrade on Friday to the forecast.
Some of the more elevated estimates from private observers have been criticised by Silas Brasileiro, executive president of Brazil’s Conselho Nacional do Café (CNC) producers’ group, as “speculative”, and potentially reflecting a desire for lower prices.
The market uncertainty evident in a range of 40m-52m bags in forecasts for Brazilian coffee output this year – a gap equivalent to the harvest in Colombia, the third-ranked producing country – is giving greater weight to estimates that Mr Brasileiro said last week were allowing traders to make “profits at the expense of millions of coffee producers in the world”.
The uncertainty stems largely from varied ideas of the extent of damage to this year’s arabica crop from last year’s Brazilian drought, which reduced the vegetation needed to carry beans for the 2015 harvest.
Mr Brasileiro has stood by a forecast for Brazilian production of 40.3m-43.25m bags, as identified by a survey by ProCafe commissioned by the CNC,
However, many traders have highlighted the extent of their research, with Volcafe for instance saying that its estimate followed a crop tour which “covered 14,000 kilometres and analysed over 3,000 farms”.
USDA data on Brazilian coffee output actually have a history anyway of exceeding Conab estimates, which end up showing negative stocks if followed long-term, a department official has told Agrimoney.com.
The USDA bureau said that its latest report followed field trips to three coffee-growing states – including Minas Gerais, Brazil’s main grower of arabica beans, and Espirito Santo, the top producer of robusta – besides information “from government sources, state secretariats of agriculture, growers’ associations, co-operatives, and traders”.
The research revealed damage to Brazil’s robusta trees from a “prolonged dry spell and above-average temperatures during the summer months” in Espirito Santo, where a shortage of water also limited use this time of the irrigation which many view as having helped a bumper 2014 result.
The bureau forecast Brazilian robusta output falling 2.6m bags to a 14.4m bags this time, a four-year low, and below Volcafe’s 16.4m-bag estimate.
However, the bureau was more upbeat than other commentators on prospects for arabica production, seeing it hit 38m bags – up 3.8m bags year on year, on its estimates, and only 1.5m bags below the pre-drought harvest of 2013.
“Overall, good blossoming in September/October in major producing regions, and good weather conditions during October/November through March/April, except for a dry spell in January, contributed to the physiological development of the coffee trees,” the bureau said.
“In addition, steady and strong prices in 2014 also allowed good crop management which has supported reasonable cherry setting and development.”
The bureau nonetheless forecast Brazilian coffee production as inadequate to meet demand from both domestic drinkers and importers.
Exports for 2015-16 were forecast at 33.3m bags, a historically high figure, if – “due to lower expected product availability” – below the record 35.9m bags expected for 2014-15, on a July-to-June basis.
This season, “the steady devaluation of the local currency, the real, has supported the Brazilian arabica coffee competitiveness in international markets given that production costs in reais remained stable during 2013 and 2014”, at a little over R$300 per bag.
Brazil’s coffee stocks will fall 47% this season, and by a further 25% in 2015-16 to a four-year low of 4.29m bags, the bureau said.
(Source – http://www.agrimoney.com/news/us-officials-raise-bar-on-brazil-coffee-harvest-forecasts–8326.html)