Colombia Coffee Crop May Top USDA Estimate as Trees Rejuvenated

  • Yields rise 45% over the past 2 years as old trees eradicated
  • Exports seen increasing 9.1% this year on weakening peso

Coffee output in Colombia, the world’s second-largest producer of Arabica beans, may climb about 4 percent next year as replanted trees improve yields, according to the country’s growers group.

Production will rise to as much as 13.7 million bags from 13.2 million estimated for this year, said Roberto Velez, the chief executive officer of Colombian Coffee Growers Federation. The projection exceeds the U.S. Department of Agriculture’s June forecast of 13 million.

Arabica coffee, the kind used in specialty drinks such as those made by Starbucks Corp., this month tumbled to the lowest since January 2014 as grower currencies slid against the dollar, encouraging producers to increase exports. About 67 percent of Colombia’s coffee farms, representing some 640,000 hectares, have been replanted over the past five years, Velez said.

“These new trees are starting, or have started to bear new fruit, giving us this increase in production,” Velez said in an interview in Tokyo on Wednesday.

Yields this year are projected at 16 bags per hectare, up 45 percent from 2013 as the average age of trees fell to 7 years from 9.5 years as a result of the farm renewal, he said. Next year, 50,000 hectares will be replanted, while the nation’s total farms will remain steady at about 950,000 hectares, he said.

Increasing Exports

Colombia’s coffee exports may increase 9.1 percent to 12 million bags this year as a weaker peso makes its crop cheaper to customers buying in dollars, Velez said. A bag weighs 60 kilograms, or 132 pounds.

“As an export-driven sector, the coffee industry in Colombia is in a happy mood” due to the falling currency, Velez said.

The Colombian peso has declined 16 percent in the past six months, the second-biggest loser among emerging-market currencies, amid expectations that the U.S. Federal Reserve will raise interest rates.

A weaker peso boosted coffee farmers’ income, which will also help increase yields as growers will spend more to buy fertilizers to expand output, Velez said.

The global market will be in deficit of 4 million to 7 million bags this year as adverse weather curbs output in other nations, Velez said. Shortages won’t be resolved next year unless output improves in Brazil, the top producer, he said.

Futures in New York may rise to $1.30 a pound by the end of 2015 and to $1.40 by March 2016, according to Velez. Arabica coffee on ICE Futures U.S. have fallen 27 percent this year to $1.211 a pound on Wednesday.

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