December 6, 2018 / 3:48 PM / 10 days ago

UPDATE 1-Brazil likely to produce another large coffee crop in 2019 -company

(Includes details of estimates, comments from company’s CEO)

By Roberto Samora

SAO PAULO, Dec 6 (Reuters) - Brazil is likely to produce another large coffee crop next year after the record output of 60 million 60-kg bags in 2018, despite the ‘off’ year for arabica trees, according to estimates from Brazil’s largest coffee processing company.

3corações coffee group, a 50-50 joint venture between Israel’s Strauss Group Ltd and Brazil’s São Miguel Holding, projects Brazil’s 2019 coffee harvest at 55 million bags, only slightly below the record output seen this year, as ample rains boost production prospects.

3corações Chief Executive Pedro Lima told Reuters that the company, which has a team of analysts evaluating production trends in Brazil, expects arabica coffee production to fall to 35 million bags next year, compared to 44 million bags in 2018, as the variety usually goes through a sharp production fall in years after large harvests.

But the company projects robusta coffee production to grow to 20 million bags next year from 16 million bags in 2018, confirming a recovery trend in the country for this type of coffee, whose production fell sharply in recent years while the main producing state Espírito Santo was going through its worst drought on record.

Arabica beans are mostly sought by makers of higher quality coffee brands, while robusta coffee is widely used by instant coffee producers.

“It might be the largest off-year crop ever,” said Lima, referring to overall production expected next year.

Brazil’s largest production in an off year to date was in 2013, when farmers collected 49.15 million bags.

Lima said the prospect should keep prices stable in coming months. Arabica coffee futures in New York touched a 12-year low in September and have been hovering around the same level since, a bit above 1 dollar per pound.

The executive said the large coffee volumes this year helped the company, which has a 27-percent share of the local ground roasted coffee market, to boost profit margins. He expects revenues to grow 10 percent in 2018 to 4.8 billion reais ($1.22 billion).

Besides the ground roasted market, 3corações is the second-largest player in soluble coffee, only behind market leader Nestlé, and sells a full line of capsules with its own machines.

Lima said the company will invest 320 million reais next year, mostly to improve its sales in the specialty coffee segment, which is growing at much higher rates than the overall market in Brazil. ($1 = 3.9225 reais) (Reporting by Roberto Samora; Writing by Marcelo Teixeira Editing by Chizu Nomiyama and Andrea Ricci)

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