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Starbucks Supplier Says Brazil Damage Worse Than Thought

Feb. 13 (Bloomberg) -- Coffee output in Brazil, the world’s top producer, may be as much as 30 percent less than expected in its biggest producing state as drought losses are irreversible, the country’s largest exporter said.

Damage from the driest January since 1954 caused damage in Minas Gerais state “more severe than imagined,” Carlos Alberto Paulino da Costa, head of Cooperativa Regional de Cafeicultores em Guaxupe Ltda, known as Cooxupe, said today in an interview in Guaxupe, Brazil. He said his comments are based on preliminary assessments.

Cooxupe, Brazil’s biggest supplier of coffee to Starbucks Corp., will complete a thorough evaluation when rain resumes in Minas Gerais, he said. He declined to provide his initial estimate for this year’s crop. The cooperative’s 11,700 growers produce about 13 percent of Brazil’s fine-cup Arabica coffee.

“Leaves are getting burned and the formation of the beans isn’t right,” Luiz Carlos Souza, a farmer with 6 hectares (14.8 acres) in Alterosa, Minas Gerais, said today. “We’re also worried about the next crop as branches aren’t growing.”

Concern the drought will harm Brazil’s coffee crop pushed up international prices last week. Arabica futures in New York had their biggest weekly intraday rally in almost 14 years.

Wilted Beans

Brazil is expected to harvest between 35.1 million and 37.5 million bags of Arabica coffee this year, the Brazilian Agriculture Ministry’s Conab crop-forecasting agency said Jan. 9 in its first estimate. Harvest of the variety typically starts in April. A bag weighs 60 kilograms (132 pounds).

“In my farm it rained only 102 millimeters last month, while the normal for this time of the year is above 300 millimeters,” Cicero Moreira da Silva, who has 60 hectares with coffee in Guaxupe, said today. “Some farms had less than 40 millimeters. Beans aren’t developing well. I think I’ll lose about 20 percent of the production.”

To contact the reporters on this story: Gerson Freitas Jr. in São Paulo at gfreitasjr@bloomberg.net; Lucia Kassai in Houston at lkassai@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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