A large Brazil coffee harvest will keep coffee futures prices in a range of $1.80 to $2 per lb for the next six months at least as the market eyes a large Brazil harvest, the head of Italian coffee roaster Illycaffe said in Sao Paulo on Thursday.
Andrea Illy said he expected coffee production from Brazil's upcoming 2012/13 coffee crop to reach 55 million 60-kg bags, the same estimate he had given late last year for the harvest in the world's top coffee producer that starts in around two months.
"Brazil's harvest will be good in terms of quality and quantity," Illy said. The consensus among exporters and analysts is for a large harvest this year, but one likely to be smaller than the last 'on year' crop of 2010/11 due to two prolonged dry spells during the crop's development.
The 2012/13 harvest is in an on-year, in which trees' output surges in between years when trees recover by producing less. The previous 'on year' in 2010/11 turned out 48.1 million bags, the agriculture ministry says. It put last season's off-year crop at 43.15 million bags.
Illy said the new crop would be generally good quality due to the favourably dry weather, and that Brazil was gaining market share from Colombia whose crop quality had been hit by rains. He added that Brazil had raised its profile in the supply of quality arabicas as Colombia struggles to raise output. "I think Colombia has lost market share to Brazil which has managed to make the most of a drop in (Colombia's) output," he said. "Brazil is now recognised as a specialty coffee producer."
Illycaffe, which uses smoother arabica beans exclusively and none of the robusta kind, buys about half of its supplies from Brazil. Its sales grew about 10 percent in 2011 despite Europe's economic woes, Andrea Illy said. "Despite rising costs, the company has done well and maintained its finances in balance in 2011," he said, adding the company's budget swelled by about 40 million euros ($52.28 million) last year.