RPT-Brazil coffee crop to fall 13 pct, remain weak next year -Procafe - RTRS

By Reese Ewing

GUARUJA, Brazil, May 7 (Reuters) - Brazil's 2014/2015 coffee crop is expected to drop to 40.1-43.3 million bags after a drought early this year, more than 13 percent below the government's January forecast, the non-profit coffee research group Fundacao Procafe said on Wednesday.

The hot, dry spell that sent coffee prices up 80 percent since January will also hold production of arabica beans back next year, Procafe agronomist Jose Matiello said at the International Coffee Seminar in Guaruja.

Matiello's research, based on surveys of half a million hectares worth of farms across Brazil's 8.5 million-hectare coffee belt, showed the worst-hit regions to be at the heart of the world's largest coffee belt.

"South Minas will show average losses of about 30 percent, with the greatest impact felt in the larger screen (size) beans," Matiello said.

The government's crop supply agency Conab forecast a coffee crop of 46.4 million to 50 million 60-kg bags in January before data on the effects of the drought could be gathered.

Conab is due to release a revised estimate of the crop on May 15, and there is little doubt it is going to be reduced.

"On the bright side, the crops of 2016 and 2017 should produce well after two years of poor output," Matiello told the conference hall a 30-minute boat ride from where a third of the world's coffee exports set sale in Santos.

Matiello added that even favorable weather from here out will not offset the impact of the drought on Brazil's coffee belt next year when it is expected to yield a disappointing 38.7 million to 43.6 million 60-kg bags.

Coffee futures KCc1 have rallied 80 percent since January when the effects of the drought began to sink in. And prices are likely to remain volatile over the coming weeks until a clearer picture of the harvest trickles in.

"It's too early to know for certain but in 30 to 40 days we will have a very good idea of what the arabica crop's size is," Guilherme Braga, the director general of Brazil's coffee exporters association Cecafe, said from a kiosk at the event.

He dismissed early harvest results that have come in from regions that were likely worst hit by the drought. In addition to reducing the output of the crop, the dry hot weather accelerated the maturation of it, he said.

Cecafe is due to release April coffee export data on Thursday afternoon.

Matiello of Procafe said that output from Brazil's Mogiana area was little affected by the drought and the irrigated Cerrado regions of Minas Gerais and Bahia state were less affected than other major regions.

Harvesting of the conillon crop, a local variety of robusta, started last month and is due to accelerate this month. The crop was largely outside the drought-affected areas and is showing better yields than last year.

The Espirito Santo state farm research institute Incaper said on Wednesday the conillon harvest would reach 9.4 million bags, up from the 8.2 million last season. Conillon is consumed largely on the local market, however.

The state's southern arabica growing regions are expected to suffer losses of as much as 20 percent from the drought, after reaching output of 3.5 million bags last season, Incaper said.