960413

Coffee Revised USDA Brazil estimate seen bearish

NEW YORK: The U.S. Department of Agriculture's revised estimate of 1996/97 Brazilian coffee production, released after Friday's close, was moderately bearish and could pressure prices next week, analysts said.

The USDA estimated Brazil's 1996/97 coffee output at 27.5 million 60-kilogram bags, up 8 percent or 2.0 million bags from the preliminary forecast of 25.5 million bags released in December and 10.7 million bags more than the 1995/96 harvest.

"It will have a modestly negative impact initially," said Dean Witter analyst Steve Platt. "The market still has to consider the tight supply sitiuation, the CFTC Commitment of Traders report due later today, and the upcoming freeze season, which will attract some buying interest into the market."

Analysts added that the USDA's move was not entirely unexpected, however.

Rumors circulated in the market last month that the USDA would issue an upward revision to the Brazil estimate in mid-March, well before its scheduled June revision. Although those rumors proved false, talk of an early revision surfaced again this week.

"Everyone expected an increase at some point," said Smith Barney analyst Walter Spilka. "Before it's over we'll probably see another increase."

"It's bearish, but not unexpected," added Refco analyst Ann Prendergast. She said that prices on the Coffee, Sugar and Cocoa Exchange (CSCE) could drop to the 100-cent a lb level, but would be well supported by the short nearby supplies of stocks.

On Friday, CSCE most-active May coffee ended at 115.25 cents a lb, down 1.85 cents.

Earlier this month, Brazil's National Statistics Institute (IBGE) estimated the country's 1996/97 crop at 33 million bags, although this was later clarified to be in cherry, not green coffee beans.

The Brazilian Cooxupe cooperative later forecast the harvest at 23 million bags.-Reuter