Brazilian coffee growers are upbeat on prices because they expect a smaller crop next year but they complain that a weak dollar eroded much of the profit from a recent price rally to a 4-1/2 year peak. Some producers in major coffee state Minas Gerais see output plunging in their districts by 40 to 50 percent due to lack of crop care, poor weather and a downturn in the crop cycle of the world's biggest producer and exporter.
But traders talk of output falling only around 12 percent to between 35 million and 40 million 60-kg bags, from guesstimates of some 42 million bags this year.
And last month a senior agriculture ministry official told Reuters in Bahia that output may decline by 14 percent to about 33 million bags, from 38.3 million.
The government's first forecast for the 2005/06 (July/June) crop, which is due after the market close on December 10, will use satellite images and may help quell market speculation.
"Things might improve a little more because next year's crop is in poor condition and output will be lower," said Manoel Bertone, general director of Brazil's National Coffee Council.
"Higher prices aren't enough to pay off farmer debts or cover the cost of more expensive fertilisers," Bertone said.
He added that the weakness of the dollar eroded much of a near 30 percent increase in price of the dollar-traded commodity over the past month. On Wednesday the real hit 2.70 to the dollar.
But traders said that with fine quality coffee fetching about 270 reais ($100) per bag, growers are now making a profit after four years of misery.
Growers complain that a smaller crop will cut profits.
In south Minas, the country's biggest coffee cooperative Cooxupe expects output to fall by 42 percent to 4.07 million 60-kg bags in 2005/06 due to unfavourable weather, lack of fertilizer and the off-year in the crop cycle.
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