Brazil Coffee Crop Stable for 2015

A sharp improvement in prospects for production in the Zona de Mata region may save Brazil from suffering a third successive year of declining coffee output – an outcome it has not faced since the 1960s.

Conab, Brazil's official commodities bureau, in its first estimate for domestic coffee output this year pegged the harvest at 44.11m-46.61m bags, implying little change from the 2014 result.

The centre of the forecast range, at 45.36m bags, is just 20,000 bags above Conab's estimate for last year's crop.

'Intense cold'

The forecast factors in a drop of 6.3-10.9%, to 11.61m-12.21m bags, in the estimate for production of robusta beans.

Conab highlighted drought in mid-to-late 2014, in Espirito Santo, the top Brazilian robusta-growing state, which had also suffered "intense cold" during the coffee tree flowering period.

And for arabica beans, the bureau forecast further declines in production for most parts of Minas Gerais, responsible for some 90% of Brazilian output of the variety.

However, Minas Gerais was expected overall to see some increase in output nonetheless - thanks to expectations of a jump of at least 30% in production in the south eastern region of Zona de Mata.

Field surveys in the region "point to an increase in production of 34%, a rise equivalent to 1.82m bags, compared with the previous crop," Conab said.

Pruning payback

In part, the upbeat forecast reflects expectations of a 3.0% rise in Zona de Mata coffee area, to 293,000 hectares.

However, Conab also highlighted a boost to yields thanks to heavy pruning in previous seasons, meaning trees which did not produce last year will come fresh to the 2015 harvest.

Higher arabica coffee prices, which soared 51% in New York's futures market last year, have encouraged an "improvement in cultivation", while the region has enjoyed better weather too, following the persistent drought which struck Minas Gerais last year.

Conab said that "good flowering occurred" in Zona de Mata during the late-year blossoming period, which enjoyed "favourable weather conditions".

'Quite defoliated'

However, the bureau also highlighted the requirement for rains throughout the coffee belt during the next two months, to encourage the development of coffee cherries.

And it noted that many areas were still suffering a hangover from last year's drought, showing "low growth" of the new vegetation required to bear cherries, and posing "uncertainties" over coffee-carrying capacity.

"In older plantations that produced well last year, trees are generally quite defoliated," Conab said.

Range of estimates

The overall coffee harvest forecast, of 44.11m-46.61m bags, is in line with estimates from other observers, such as Rabobank, which has pencilled in a 42m-47m-bag crop, and Citigroup at 44.7m bags.

FO Licht has outlined a 43m-bag harvest, but Volcafe has proven one of the most upbeat commentators, with an estimate of 49.5m bags.