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Brazil's 2018 coffee crop is expected to reach 58.04 million 60-kg bags, surpassing a previous record of 51.37 million bags in 2016, Brazil's agricultural statistics agency Conab said in a report on Thursday. Conab revised its January projection that had put production at a range between 54.44 and 58.51 million bags, putting the current estimate at the top of that range, with prospects helped by favourable weather and good crop care.
Brazil, the world's largest coffee producer and exporter, reported an output of 44.97 million bags last year. The country is going through the 'on' year in its biennial coffee production cycle, which alternates years of lower and higher outputs, a factor that was also cited by Conab. The government's agency projected arabica coffee output at 44.33 million bags versus the 41.74-44.55 million bags range it had seen in January and 34.24 million bags produced in 2017.
The production of robusta, a coffee variety more widely used to make instant coffee, was seen at 13.71 million bags versus a range between 12.69 and 13.95 million bags in January and 10.72 million bags produced last year. Conab's revision confirmed views from analysts and market participants that Brazil will indeed have a bumper crop.
Some expect numbers above 60 million bags, saying robusta recovery in Brazil after a severe drought in 2015 and 2016 is significant. Farmers in Brazil's top robusta producer Esporito Santo have invested in water supplies to guarantee better crops. "True or not the sentiment is that the conilon (robusta) crop can surprise even more on the upside, with some agents suggesting a figure as high as 18 million bags," Rodrigo Costa, a director at trader Comexim in New York said in a note to clients.
Low global prices are impacting new coffee planting, Conab said. Arabica fields under development in Brazil fell 18 percent in 2018 compared to 2017 or 55,000 hectares less. Arabica futures in New York are trading at the lowest levels since March 2016.

Copyright Reuters, 2018

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