Brazil’s 2016 coffee crop could hit record high, officials say

Brazil’s coffee production could rebound to a record high this year, helped by “favourable” weather in top arabica-growing regions – which could see output soar by up to 58%, officials.

The Conab agriculture bureau, in its first estimate for this year’s coffee harvest in the world’s top producing country, pegged it at 49.1m-51.9m bags.

That could see the crop beat the all-time high of 50.8m bags achieved in 2012.

At worst, output was seen in line with the 49.2m bags reaped three years ago, the second best harvest on record, and before the early-2014 onset of severe drought which in its immediate and knock-on effects on trees severely hurt the following two harvests.

‘Very favourable weather’

The forecast reflected in the main expectations of a sharp recovery in arabica this year, to 37.73m bags, from the drought-depressed level of 32.05m bags reaped in 2015.

Conab highlighted “very favourable weather conditions in the main arabica producing regions”.

In Minas Gerais, the top arabica-growing state, October bought “high temperatures and below-average rainfall which restricted the fixation and occurrence of blossoms”.

However, conditions changed, in the main part, in November, bringing rains which limited damage.

The improvement is also expected to be supercharged by the cycle of Brazilian arabica output, which operates on alternate higher and lower producing years – with 2016 an “on” year.

Regional gap

The Cerrado Mineiro region in the north west of Minas Gerais will see output soar by potentially 50-58% this year, lifted in the main by a jump of 40% or more in yields, with extra plantation area boosting production too.

Conab also noted the benefit coming through from severe pruning, or skeletonization, which many growers undertook during the drought years, so as to reduce stress on the trees at the time from bearing fruit.

However, the Zona de Mata area in south east Minas Gerais will see output remain depressed, and likely below 2015 levels, thanks to continued damage to crops from drought, particularly in lower altitude regions.

Crop tours to the area showed a weaker blossoming period, implying weaker cherry yields.

Robusta prospects

Brazilian output of robusta coffee will also grow, but less so, by 1.8-8.0% to 11.4m-12.1m bags, limited by continued drought in Espirito Santo, the top state for growing the variety.

Indeed, Espirito Santo robusta output, at 7.47m-7.93m bags, was seen in line with the 7.76m bags produced last year.

Conab said that drought had boosted pest numbers, besides causing harm to crops – promoting leaf fall as well hampering blossoming, fertilization and cherry development.

Range of forecasts

The bureau’s forecasts for Brazil’s overall coffee production are towards the lower end of the range of estimates from market commentators, although above figures within the last week from the country’s IBGE institute and CNC producers’ group.

London broker Marex Spectron earlier this month pegged the drop at 57.5m-58m bags, while Singapore-based ag trader Olam International has put it at 60m-62m bags.

Conab’s estimates are, though, seen as typically conservative, and often underestimating actual output.