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Colombia cuts coffee hopes as La Nina fears mount


images (5) Coffee prices bucked a negative trend in farm commodities after coffee producers in Colombia, downgraded their output estimate for the third time in four months, amid growing fears for the revived La Nina weather pattern.

Genaro Munoz, head of Colombia’s coffee growers’ federation, said that the coffee crop in the world’s second-ranked producer of arabica beans would come in at 8m bags this year, taking it 200,000 bags from matching a 35-year low.

The revised figure was below the 8.5m bags the federation forecast last month, and initial hopes of a 9.5m-bag crop, an estimate which was cut to 9m bags in August.

The downgrade was blamed on unusually strong rains, which official meteorologists see lasting into next year because of the La Nina weather pattern, which causes disruption particularly in the southern hemisphere is taking a higher profile.

‘Possibly strengthening’

Indeed, the United Nations on Thursday said that the La Nina was "expected to persist through the end of this year and into early 2012, possibly strengthening to moderate intensity".

On agricultural commodities markets, the return of the weather pattern has prompted official meteorologists in Malaysia, the second ranked producer of palm oil, to warn of severe monsoon rains, helping palm oil futures set a five-month high of 3,270 ringgit a tonne in Kuala Lumpur on Friday, up 18% from an early October low.

"Underlying palm oil sentiment is improving due to lower production expectations from the fourth quarter, as dominant South East Asian producers enter the rainy season and the La Nina weather pattern is seen returning," Ker Chung Yang at Singapore-based Phillip Futures.

The La Nina is also being closely followed on grain markets, given a drier outlook consistent with the weather pattern, which can cause damaging dryness, particularly in Argentina.

"It is a little early to start getting worried, we are about a month away from that yet, but it is something that has got people’s attention," Mike Mawdsley at Iowa-based broker Market 1 said.

‘Hit the sector hard’

Mr Munoz said that "without a doubt, the rainy season hit the sector hard," interrupting flowering on coffee trees, besides encouraging the spread of the roya fungus, which cuts yields by hampering photosynthesis.

Colombia’s coffee output fell in October for a seventh successive month, to 592,000 bags, taking total production for the first 10 months of 2011 to 6.23m bags, an 8% decline year on year.

The downgrade helped arabica coffee for March delivery close up 1.2% at 238.85 cents a pound in New York.

However, cocoa, for which La Nina is seen as helpful to production, by bringing beneficial levels of rainfall to West Africa, closed down 1.9% at $2,458 a tonne for March.

http://www.agrimoney.com/news/colombia-cuts-coffee-hopes-as-la-nina-fears-mount–3868.html

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