Sao Paulo, May 7 - The National Commodities Supply Corp, or Conab, moved its coffee crop estimate for Brazil closer to the private sector's on Thursday, but traders doubt they will be revising their own in-house estimates upward as a result.
Conab estimated that Brazil will harvest 45.5 million 60-kilogram bags of coffee beans in the 2008-09 crop, raising its estimate from an earlier range of 41 million to 44 million bags.
"Normally they stay within the range so this just shows that this crop is going to be bigger than anyone thought it would be," said Gustavo Moretti, a trader at Empresa Interagricola SA in Sao Paulo.
Private estimates by big coffee trading houses in Brazil have put the crop between 50 million and 53 million bags.
"That number won't change," said Claudio Leite, a trader at the mid-sized broker Grupo Branco Peres.
The news of a larger crop estimate had absolutely no impact whatsoever on coffee futures in New York. Despite the larger official estimate, coffee futures rose by 340 points in morning trading to $1.34 per pound for the July contract on the ICE Futures U.S. exchange.
"Nobody knows where this market is going," said a broker in Sao Paulo.
The confusion has producers mainly sitting this week out, with no big physical market sales to speak of, according to Leite's view.
"Their (farmers) lack of interest or need to sell at this point is pushing prices higher locally," Leite said.
Another Sao Paulo broker said that producers were active selling coffee futures in New York early Thursday, with some buyers.
"The business right now is in the futures market. Farmers and cooperatives will wait to see where the dust settles on the price before they make sales," the Sao Paulo broker said.
Brazil is the world's No. 1 coffee producer and exporter.
The harvest goes into full swing later this month.
Conab's Crop Forecast
The 2008-09 coffee crop should be 35% greater than last season's harvest of around 35 million bags. Of the total, some 34.7 million bags will be arabica, Brazil's main coffee commodity, and the rest will be robusta.
Brazilian consumption of coffee is between 17 million and 18 million bags and coffee exports are between 24 million and 26 million bags, according to industry estimates.
Planted area rose by around 1% to 2.3 million hectares.
Dry weather in March has had no impact on coffee farms in the main producer regions of Minas Gerais, the leading coffee producing state. The state should harvest 22.9 million bags, up 47.8% on the year due to the biennial nature of arabica coffee trees. However, the state's arabica crop should be 4% greater than the last high production year due to a near 1% increase in planted area and a 3.1% increase in yields.
The beans are in their final maturation stages in Minas Gerais and will be ready for harvest this month.
In Espirito Santo, the leading robusta producer, production should rise by 9.8% to 10.5 million bags, of which 7.8 million are robusta. Dry weather early in the September-October flowering season and again in the December fruit forming period had no major impacts. The coffee bushes recuperated well from rains starting in 2008. Conditions for the state's crop are "very favorable", Conab said.
Robusta production as a stand-alone will be around 3.7% greater than the year before due to Espirito Santo farmers spending more money on fertilizer and plant treatment.
In Sao Paulo, the No. 2 arabica producing state, 4.7 million bags of arabica are expected from this crop, more than double last year's.
Brazil's largest coffee crop was harvested in 2002-03, when 48.5 million bags were recorded.