INTERVIEW-COFCO sees Brazil coffee crop 15 pct smaller; to jump in 2018


Reuters

By Marcelo TeixeiraSAO PAULO, April 20 (Reuters) - Brazil's coffee output this
year should fall between 15 percent and 20 percent from the
previous season, but production will make a strong recovery in
2018, the global head of coffee for Chinese commodities group
COFCO told Reuters on Thursday.
    Joseph Reiner said COFCO's research team, after visiting
several producing areas in the world's largest coffee producer,
confirmed that most Brazilian farms will produce less due to the
off-year in the biennial coffee cycle.
    Brazil produced a record coffee crop of 51.37 million bags
last year, and trees usually produce less after a big harvest.
    "We've been to a lot of places, and most arabica producing
regions will effectively have smaller outputs. Between 15 and 20
percent less, but I would say more like 15 percent less," said
Reiner, who took the COFCO job this year after 11 years at U.S.
chocolate maker Mars.
    The group's agricultural division, COFCO Agri, is working to
integrate the Noble coffee operations in Brazil after it
concluded the acquisition of the rival Asian commodities trader
in March 2016. With that acquisition it became one of the 15
largest players in the Brazilian coffee export market.
    Reiner said many coffee farmers decided to adopt severe
pruning after the strong harvest last year, since they already
expected a smaller production. That could reinforce the off-year
in certain regions, but may prepare the fields well for 2018,
when trees should be refreshed.
    "We have indications for a significantly larger crop in
2018," he said, adding that newly planted areas should also
boost the trend.
    This situation of a smaller crop in 2017 and potentially
much bigger production in 2018 will create an "interesting
situation" in the market, Reiner said, with a very tight supply
expected early in 2018.
    Reiner said coffee consumers such as roasters will have to
evaluate their stocks carefully to avoid shortages when the
supply crunch comes or risk having excess supply when the 2018
crop starts to hit the market.
    COFCO has plans to increase its volumes in Brazil, but
Reiner declined to give a target.
    "We are going to use the tools the company has, our
financial strength, logistics capacity, to give better service
to clients," he said.
    Brazil's coffee export market is dominated by Cooxupé, the
world's largest cooperative for coffee farmers. Among the top
five firms are Asian merchant Olam and local firms Terra Forte
and ECOM.

 (Editing by David Gregorio)
 ((marcelo.teixeira@thomsonreuters.com; 5511 5644 7707; Reuters
Messaging: marcelo.teixeira.thomsonreuters.com@reuters.net))

Keywords: BRAZIL COFFEE/COFCO (INTERVIEW, URGENT)



This article appears in: Stocks , Commodities


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