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Brazil coffee sector sees `super crop` prospect gone with drought


By Marcelo Teixeira and Roberto Samora

 

SAO PAULO, Sept 18 (Reuters) - Brazilian coffee analysts, producers and cooperatives are backtracking on earlier forecasts that the world`s largest producer will see its biggest crop in 2018, as a harsh drought in top producing regions takes its toll.

 

Traditional coffee regions such as the south of Minas Gerais got only 10 millimeters (mm) of rain in the last 30 days, one-fifth of the normal rainfall. Rains are only expected to resume at the end of this month.

 

"The idea of a supercrop is gone," said Jandir Castro Filho, commercial manager at Cocapec cooperative in Franca, in the Alta Mogiana area in Sao Paulo state.

 

Castro said the fields with younger trees are suffering the most, as they lack long roots needed to reach water deep underground. He also said that areas where there was heavy pruning after last year`s bumper crop are also vulnerable.

 

Some analysts were expecting Brazil to reach an all-time peak of 60 million 60-kg bags of coffee next year, based on the `on year` in the biennial production cycle and the good preparation carried out by farmers.

 

As a comparison, consultancy Safras & Mercado now projects a crop of 51.5 million bags this year.

 

Coffee traders have been circulating pictures of Brazil coffee fields in poor condition, with dried branches. Coffee futures gained 10 percent on the New York`s ICE in the last two weeks as the market reduced short positions as a precaution on the drought news.

 

Castro believes younger trees could lose around 25 percent of their production potential, unless there is plenty of rains in October and November, months traditionally with more precipitation. He sees a 5 percent loss on potential production for adult trees.

 

"The situation is critical," said Thiago Motta, a farmer at the Cerrado Mineiro region, in top producing state of Minas Gerais.

 

He complains that even irrigated fields are suffering because reservoir levels are too low to pump water to the systems. Motta sees fields with less vitality and fewer flowers, key signals of how robust production could be.

 

José Braz Matiello, a researcher at Fundação Procafé, a Minas Gerais coffee think-tank, says trees are dropping more leaves than normal for this time of the year.

 

"Leaves turn yellow and fall, it is a defense mechanism for coffee, it drops leaves to save water for the tree," he said, adding he now sees next crop closer to 50 million bags.

 

According to Thomson Reuters Eikon Agriculture Weather Dashboard, South Minas should get 67 millimeters of rain by October 3.

 

Paulo Sérgio Franzini, an analyst with rural extension company Deral, in Paraná state, said trees could recover if there is enough rain in October and November, but a part of the first flowering in August is already lost, which will impact yields potential for the next crop.

 


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No

Specifications

Quant.
(mts)

Packing

Ship

Price (USD/MT)

1

Vietnam robusta coffee grade 2

5% black & broken

96.0

in bags

Nov-17

Liffe Jan, 2017 -30      OR 1,945

2

Vietnam robusta coffee grade 1, scr.16

2% black & broken

96.0

in bags

Nov-17

Liffe Nov, 2017 +30    OR 2,005

3

Vietnam robusta coffee grade 1, scr.18

2% black & broken

96.0

in bags

Nov-17

Liffe Nov, 2017 +45  OR 2,020

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Producer

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1

SVR CV60

60.48

SW

Nov-17

1,685.0

VRG

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40.32

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Nov-17

1,625.0

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40.32

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1,640.0

Private

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40.32

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1,630.0

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40.32

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Nov-17

1,610.0

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6

Latex HA

43.00

In bulk

Nov-17

1,065.0

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7

Latex LA

21.50

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Prompt

1,080.0

Private

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1

Black Pepper (FAQ, 500g/l)

13.5

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Jun -16

8,190.0

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