World Coffee Production to Rise 11%, USDA Unit Says (Update1)

By Debarati Roy

June 18 (Bloomberg) -- Global coffee production will rise 11 percent to a record in the year starting July 1, led by gains in Brazil, the biggest grower, a U.S. Department of Agriculture unit said.

Worldwide output will rise to 139.7 million bags from 125.7 million a year earlier, the USDA’s Foreign Agricultural Service said today in a report. Brazilian production will increase 23 percent to a record 55.3 million as crops enter the more- productive phase of a biennial cycle, the agency said. A bag weighs 60 kilograms (132 pounds).

This week, coffee futures in New York surged 11 percent, the most since January 2006, partly because of supply concerns in Brazil. The price for premium arabica beans reached a 27- month high. Inventories monitored by ICE Futures U.S. have dropped 27 percent this year to the lowest level since September 2002.

Vietnam, the second-largest producer, will harvest 18.7 million bags in the year starting Oct. 1, up 7 percent, the agricultural service said.

Indonesia, the third-largest grower, will harvest 9.6 million bags in the year ending March 31, up 4.9 percent from a year earlier.

Colombia, the fourth-largest, will produce 9 million bags in the year starting Oct. 1, up 9.8 percent. Output will trail the five-year average of 11.8 million as higher temperatures and dry weather crimp output, the agency said.

Consumption to Climb

Annual global consumption will rise 2.2 percent to 131.5 million bags, the service said.

Arabica coffee for September delivery rose 4.3 cents, or 2.7 percent, to $1.621 a pound today on ICE. The price reached $1.6305, the highest level since March 2008.

On London’s Liffe exchange, robusta-coffee futures for September delivery gained $20, or 1.3 percent, to $1,571 a metric ton. The price has climbed 9.3 percent in the past 12 months.

Arabica coffee is grown mainly in Latin America and brewed by specialty companies including Starbucks Corp. Robusta beans, used in instant coffee, are harvested mostly in Asia and parts of Africa.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

Last Updated: June 18, 2010 17:19 EDT