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Brazil’s Next Coffee Crop May Fall Short of Demand, Broker Says

The next coffee crop in Brazil, the world’s largest producer, may not be enough to meet domestic and export demand even with record production forecast, according to Escritorio Carvalhaes, a Santos, Brazil-based broker.

Coffee output in Brazil may rise to a record in the 2012-13 season starting in July as trees enter the higher yielding half of a two-year cycle and rains boost yields, the Agriculture Ministry said. Production is forecast at 49 million to 52.3 million bags, up from 43.5 million last year, Conab, the ministry’s crop-forecasting agency, estimates.

“To meet current export and domestic demand, without taking into account safety stocks re-building and annual growth in global coffee consumption, Brazil will need average crops of 54 million bags,” the broker said in a Jan. 13 report.

Brazil exported a record 33.46 million bags of coffee last year, according to data from the country’s Coffee Exporters Council, known as Cecafe.

“Despite the historical record of shipments and production, inventories both in producing and consuming countries will remain at dangerously low levels,” the broker said.

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.

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