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Brazil's Coffee Output May Fall Lower Than Expected

Posted On: 10/28/2010

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NEW YORK CITY -- The world's biggest coffee producer might produce a smaller crop next year than already anticipated as growers' efforts to improve productivity will put the plants into a lower-yielding cycle.

According to the Bloomberg news agency, Brazilian growers are reportedly taking advantage of higher margins resulting from higher coffee prices by spending more on their crops now so they will produce more later on. But by pruning branches and leaves to invigorate coffee trees, growers put the crops into the lower yielding half of a two-year cycle. The coffee plants are expected to be much more vigorous in 2012, when Brazil is set to produce a bumper crop.

Brazil's coffee output in 2011 was already expected to drop to the lowest level in four years after a drought hindered flowering for the next crop, Bloomberg reported. Brazil's National Coffee Council predicted that Brazil might harvest about 36 million bags of coffee next year, down from 47.2 million this year and 39.5 million in 2009.

Analysts anticipate that global demand for arabica beans will exceed supply by 1.3 million bags in the year starting Oct. 1. Arabica coffee prices rose this month to a 13-year high at more than $2 a pound on concern that output may fall in Brazil and Colombia, which is the world's second biggest grower.