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Brazil to Increase Coffee Production by Up to 23% This Year

Coffee tree from BrazilCoffee crop in Brazil this year may beat the 48.48 million bag record, the country’s crop supply agency said in a report which also raised forecasts for the newly-begun soybean harvest.

The world’s biggest coffee grower will produce 45.89-48.66 million bags of beans in 2010-11, an increase of up to 23% on this year’s harvest and potentially beating the record set eight years before, Conab said.

The rise is down in part to coffee’s biennial cycle, which sees periods of lower production, such as the 2009-10 year which ends in March, followed by “on” years of greater output.

However, it also follows Brazil’s heavy rains in the second half of 2009 which, while interrupting the sugar cane harvest, encouraged coffee trees to grow extra foliage.

Conab also raised its estimate of the 2009-10 soybean crop in Brazil, the second-ranked producer after America, by 600,000 tons to 65.16 million ton, also a record. The revision was in part credited to rains which had, in the south, “favored flowering and grain formation”.

Conab pegged the corn harvest at 50.49 million tons, 350,000 tons higher than its previous estimate, if below last year’s record 51 million-ton crop.

Higher soybean prices have encouraged farmers to switch from corn to soybeans, a trend highlighted on Wednesday by Monsanto in noting a decline in seed sales. The revisions had been foreseen by analysts, and follow encouraging reports from the early harvest.

Exports to Arabs

The volume of coffee shipped from Brazil to the Arabs in 2009 grew 25%, and revenues from exports increased by 4.7% in comparison with 2008. In the whole of last year, 1.32 million bags of the product were exported, generating revenues of US$ 163.1 million. The data was supplied by the Brazilian Coffee Exporter Council (Cecafé).

Syria accounted for 37.44% of purchases and Lebanon bought 25.56% of the Brazilian coffee shipped to the Arabs.

To Guilherme Braga, the president of the Cecafé, the increase in exports to the Arabs is due to “a process of maturation of trade relations between Brazil and those countries.” According to him, other contributing factors are pricing and the increased number of varieties of coffee that Brazil has been exporting.

For 2010, Braga stated that he expects growth of 7% in volume and of 20% in revenues from exports to the Arabs. He claims that, in 2009, revenues were harmed by the product’s low price, which only recovered towards the end of the year. According to the Cecafé president, the organization expects the price of the bag of coffee to rise by 10% this year.

In total, Brazil exported 30.3 million bags of coffee in 2009, the best result in four years, volume-wise. The US$ 4.27 billion in revenues obtained, however, were 10% lower than the figure for 2008.

MP/Anba

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