Turin, April 10 - Global output of green coffee in 2007/08 is expected to drop 4-6 percent with a lower crop in Brazil partially offset by higher production in some other countries, Italy's leading coffee roaster said.
"The global output will surely be lower than in the previous year. This is mostly because the next Brazilian crop will be off-cycle," Mario Cerutti, director of supply chain and coffee buying department at Italy's Lavazza told Reuters.
"We can say that surely there will be a 4-6 percent decline in global crops," Cerutti said in an interview, putting his estimate -- based on official data and information from the company's suppliers -- at 115-120 million 60-kg bags.
The International Coffee Organization (ICO) in March estimated world coffee production in 2007/08 at around 112 million bags, down from 122 million in 2006/07.
Speaking at Lavazza's headquarters in Turin, Cerutti said the crop in Brazil, the world's biggest coffee grower, was expected at about 35-37 million bags, down from 46-48 million bags in the previous year.
In a preliminary estimate in December, the Brazilian government forecast the new crop at about 31-32 million bags.
Lavazza is the world's seventh biggest coffee roaster by purchases of green coffee. The family-owned group buys about 2.2-2.3 million bags a year with more than one third of its coffee coming from Brazil, followed by Vietnam and Colombia. Cerutti said Vietnam, Indonesia, Costa Rica, Peru and Honduras may slightly increase output of green coffee as growers had been encouraged by high market prices, and coffee stocks would also cushion the decline.
"We think that globally, a 10-13 million bag decline in Brazil can be (partially) compensated by some 4-5 million bags more from these countries. So, there will be 5-8 million bags less year on year. This decline will be compensated by the reduction of stocks," he said.
Cerutti said green coffee prices -- which rocked the markets last year -- should stabilise this year thanks to an expected balance of demand and supply, if exchange rates, climate and geopolitical situation remained fairly stable.
"I think that, based on the fundamentals, the market should remain fairly stable, moving between $1.00-1.10 and $1.20-1.30 per lb for arabica and $1,500-$1,600 per tonne for robusta... We can see the market in this range this year," he said.
But speculative trade by financial investors may add some short-term volatility, Cerutti added.
U.S. arabica coffee futures closed lower on Monday, with the New York Board of Trade open-outcry May coffee settling down 1.20 cents or 1.1 percent at $1.0965 per lb.
In London, robusta coffee futures were expected to open lower after the four-days Easter break and after ending slightly higher on Thursday with LIFFE's benchmark May contract settling up $9 at $1,542 per tonne.
Weather conditions in major coffee growing countries have been favourable so far this year, Cerutti said.