Bloomberg News

Colombia Coffee Crop May Miss Forecasts After Bad Weather

October 24, 2011

(Closes coffee price in sixth paragraph.)

Oct. 24 (Bloomberg) -- Colombia, the world’s second-largest supplier of Arabica coffee beans, may produce its smallest crop in two years in 2011 because of excess rain that poses a risk for next year’s harvest, according to a top growers’ leader.

Output may slide to less than 8.5 million bags this year, said Mario Gomez, a member of the board of Colombia’s National Federation of Coffee Growers for almost three decades. In August, the Federation cut its forecast to 9 million bags, from 9.5 million previously. Last year’s crop was 8.9 million bags.

“Output could be hit mainly because of the weather,” Gomez said in an interview on Oct. 21 near the city of Manizales in the heart of Colombia’s central coffee-growing region. “Production isn’t responding. Coffee like no other product needs light” and periods of dry weather, he said.

Coffee has jumped 25 percent in 12 months as lower production in Colombia contributes to a slide in stockpiles of the bean brewed by Starbucks Corp. and Dunkin’ Brands Group Inc. The outlook for a smaller Colombian crop fuels concern about a lack of supplies, Sterling Smith, an analyst at Country Hedging in St. Paul, Minnesota, said today in a phone interview.

“There’s nervousness about beans in the market that’s starting to affect the price,” he said. “It means we will still be short beans.”

Arabica-coffee futures for December delivery rose 5.95 cents, or 2.4 percent, to settle at $2.5080 a pound at 1 p.m. on ICE Futures U.S. in New York, the highest since Sept. 21.

Falling Production

Wet weather that disrupted flowering cut Colombian production this month and will contribute to declines in the fourth quarter compared with last year, Gomez said against the backdrop of green rolling hills dotted with farms. In September, production fell 13 percent to 459,000 bags, the smallest monthly amount in more than two years.

“This year is a difficult one in terms of production too,” Gomez said. “We can’t change the climate.”

Colombia is bracing for a possible resurgence of above- average rainfall in December through March as forecasters predict the return of the weather pattern La Nina that brings wet weather and affects flowering. La Nina also may curb output in Brazil, the largest producer of Arabica beans, Smith said.

Plant Replacements

To fuel a domestic production rebound, the Colombian Federation has accelerated efforts to help farmers replace aging plants with disease-resistant varieties. Plants sowed two years ago should help increase next year’s crop to 10 million bags and boost the harvest to 13 million to 14 million bags by 2015, Gomez said.

Each bag weighs 60 kilograms (132 pounds).

For Wilmer Campo, who travels from town to town following the year-end harvest, a poor crop means lower pay as his salary is based on the weight of the beans he harvests. Rain and humidity causes leaf-rust fungus, which attacks plants and can reduce the quality and quantity of production.

“It’s been a soft harvest,” said Campo, 24, as he picked ripe red beans with fingers blackened with dirt. “And the harvest is already ending. Leaf-rust disease has been very bad.”

Adverse weather reduced Colombian output by 32 percent to 7.8 million bags in 2009, the lowest crop since 1976.

--Editors: Dale Crofts, Robin Saponar

To contact the reporter on this story: Heather Walsh at hlwalsh@bloomberg.net

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


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