Brazil could produce at least 42 million 60-kg bags of coffee in 2006 but it won't be a record crop because reduced fertiliser use will curb yields and the area is stable, Brazil's senior coffee official said on Friday.
If favourable rains continue during the crop's maturation phase in the first quarter of next year then the world's No 1 coffee grower would produce some 25 percent more coffee than the officially estimated 33.3 million bags harvested in 2005.
"Brazil should produce 42 million bags just to meet coffee demand and prevent stocks disappearing," Linneu da Costa Lima, Secretary of Production and Agroenergy at the agriculture ministry, told Reuters in an interview at a coffee industry conference in north-east Brazil.
He said that 26 million bags was needed for exports and 16 million bags for the domestic market.
Costa Lima said that during the last three years Brazil had averaged little more than 33 million bags of coffee annually, or some 10 million bags less than needed to supply the market.
Experts from the government's crop supply agency Conab are carrying out a field survey for the first official 2006/07 (July/June) crop estimate which is due to be released on December 9.
Some traders speculate that output could top the record 2002/03 crop, officially estimated at 48.5 million bags and by the market at 53 million bags.
Last week US green coffee merchant Mercon Coffee Corp said after a seven-day field trip to Brazilian coffee farms that current conditions suggest a crop of between 44 million and 48 million bags in 2006/07.
Costa Lima added that the government was worried about tight supplies in the run-up to next year's harvest.
"Stocks have fallen sharply and carry-over stocks into the next crop year will be extremely tight," he said.
Brazil's total stocks are forecast shrinking to less than 2 million bags by June 2006 when the new arabica harvest starts in Minas Gerais, Brazil's main producer. Robusta harvesting in Rondonia and Espirito Santo starts slightly earlier.
Low Brazilian stocks coincide with global coffee consumption outstripping output and shrinking world stocks.
In a move to keep the market supplied short-term, the government is proposing to auction some 160,000 bags of arabica coffee remaining from purchases under an options program in 2003 when prices were depressed by global oversupply. More than 900,000 bags were bought under the scheme.
The government could also double the monthly auction of 40,000 bags of official stocks of old coffee to supply local roasters. Stocks stand at just under 3.4 million bags.
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