Volcafe has raised its forecast for Brazil's 2014/15 coffee crop to 47.0 million 60-kg bags, the Swiss-based coffee division of commodities house ED&F Man said in a report received on Friday. The company had put the crop at 45.5 million bags in April.
"We have adjusted our 2014 Brazilian production forecast up modestly to 47.0 million bags, reflecting better than expected yields in Minas Gerais and a larger Conillon (robusta) crop," Volcafe said in a quarterly update. "In general, harvest yields have confirmed our initial worries and the arabica crop at 29.5 million bags is set to be the lowest since 2007." Volcafe said the Brazil crop would be 18 percent below the prior season's production, resulting in the largest global deficit since 2005/16.
The report said, however, it was the possibility of a further deficit in the 2015/16 season which was keeping prices elevated and the market on edge. "While it is too early to attempt a 2015 forecast, it is clear that the condition of the coffee trees in Brazil just ahead of the main flowering is poor," Volcafe said.
A potentially reduced 2015 Brazilian crop would heighten the risk of a further global deficit in 2015/16 which would reduce the stocks-to-use ratio to unprecedented levels, it added. Volcafe forecast the 2014/15 crop in top robusta producer Vietnam at 28.5 million bags, down from 30.0 million in the prior season. "While substitution to pepper production, as well as a frost in the north, has been negative for output in the coming season, good robusta prices have by and large supported input use and renovation," the report said.