Coffee output in the world's top grower rises and then falls from one year to the next due to a biennial cycle of larger "on" and smaller "off" years. This year's 2012/13 crop came was an "on" year while next year's will come in an "off" year.
Brazil's coffee crop, which is 75 percent arabica and 25 percent the cheaper robusta variety, is in the early stages of its development and will begin harvesting around May or June. Sao Paulo-based Terra Forte said the heart of Brazil's coffee belt in the south of Minas Gerais state would see output rise by 1.4 million bags or 11 percent from last year.
That seemed to contradict the trend forecast by Brazil's biggest co-operative, Cooxupe, which expected a dip of 25 percent in output from last year in the area it serves: southern Minas Gerais and a slice of northern Sao Paulo state. Dry weather at the crop's outset had become a concern for producers, some of whom said they suffered minor losses of blossoms and tiny buds that develop before the coffee fruit forms, but rains have since improved. No official government estimate has been made for the crop, but one is usually given by January.
Arabica coffee futures have been on a fairly steady slide since October with traders expecting a large Brazilian crop and as global supplies return to a more comfortable level. Fears of shortages pushed arabica to a 34-year high above $3 per lb in early 2011. The March arabica contract on New York's ICE exchange was trading 0.65 percent lower on Monday at $1.5285 per lb. Terra Forte's estimate would also put output 15 percent ahead of the last comparable harvest in the 2011/12 off-year which produced 46.6 million bags.