World Coffee Production to Fall Next Crop, ICO Says

World coffee output may slide next season as stockpiles hover near a record low because of a smaller harvest in Brazil, the world’s biggest producer, the International Coffee Organization said.

Global output in the 2011 crop year may fall from between 133 million and 135 million bags in the current season, ICO Executive Director Jose Sette, 55, said yesterday in an interview. He declined to give a specific forecast.

“Brazil is such a big chunk that unless there is something unexpected in the other countries, inevitably the next crop year has to be smaller,” Sette, 55, said in Cartagena, Colombia.

Coffee has surged 50 percent this year and touched a 13-year high in New York yesterday, as above-average rainfall in Central America and Colombia hurt harvests. Brazil may harvest 36 million bags of coffee next year, down from 47.2 million this year and 39.5 million in 2009, Gilson Ximenes, the head of the National Coffee Council, said in an interview on Oct. 22.

Coffee stockpiles in producing nations dropped to about 12 million bags this year, the lowest since the London-based ICO began keeping records in the 1960s, Sette said after trading closed yesterday. Each bag weighs 60 kilograms, or 132 pounds.

‘Sky-High Prices’

“If we do have a significant production problem, then we don’t have a cushion,” Sette said. “It would lead to sky-high prices.”

Arabica coffee for December delivery rose as much as 1.05 cents in early trading in New York before retreating. Coffee fell 0.65 cent, or 0.3 percent, to settle at $2.0515 a pound at 2 p.m. on ICE Futures U.S. in New York. Yesterday, the price touched $2.0925, the highest level since August 1997.

Global coffee consumption may rise this year and next, Sette said. Last year, demand slid to 129.1 million bags from 130.6 million bags in 2008, according to ICO figures.

Output by Vietnam, the world’s second-largest coffee producer, may rise this season, even as above-average rainfall threatens to delay crops, he said. Above-average rainfall in some countries and drought in others are signs that climate change will keep affecting global crops, Sette said.

Colombia, the second-largest producer of arabica beans after Brazil, will harvest about 9 million bags this season, up from 8.1 million bags last season, Mauricio Bernal, chairman of the National Association of Coffee Exporters, said yesterday in Cartagena, on the nation’s northern coast.

Colombian Output

The nation’s production probably won’t return to above 12 million bags for two or three years, Colombian Deputy Agriculture Minister Ricardo Sanchez said yesterday after meeting with coffee exporters. The nation last reached that level of output in the 2007 season.

Above-average rain has damaged crops this year. Higher prices probably will encourage farmers to buy fertilizer to help protect crops from a fungus that spreads in wet weather, Bernal said.

Brazil’s April-to-March crop year overlaps with countries that have crop years running from October to September. The overlap means that the ICO is including Brazilian output from the current harvest that will finish this year with countries that will complete their harvests next year. Brazil’s coffee harvest runs from around April to October.

To contact the reporters on this story: Heather Walsh in Cartagena at hlwalsh@bloomberg.net.

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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