April 3, 2019 / 9:13 PM / in 16 days

UPDATE 1-Brazil coffee crop seen at 55 mln bags, good quality -Illy

SAO PAULO, April 3 (Reuters) - Brazil’s 2019 coffee crop, which is nearing the harvest period, should reach 55 million 60-kg bags, compared to the record output of 61.6 million bags in 2018, Italian processor Illy said on Wednesday.

Of that total, Illy expects that the milder arabica variety will account for 38 million bags, with production of robusta coffee seen at 17 million bags. Brazil’s government saw arabica production at 47.4 million bags and robusta output at 14.2 million bags in 2018.

The Italian roaster expects a crop with good quality this year, despite the lower production, which it says is due to the biennial production cycle in Brazil which alternates years of high and low production. That cycle impacts mostly the arabica trees, with robusta crop showing a more stable output from one crop to another.

“There was also the factor of smaller use of crop care products by farmers, due to lower coffee prices,” said Andrea Illy, the group’s chairman, to reporters in Sao Paulo ahead of the company’s annual event with its associated Brazilian coffee producers.

Brazil usually accounts for half the total volume that Illy buys every year to produce its global espresso blend, that also includes other origins such as Colombia and Ethiopia.

Andrea Illy said the company expects the global coffee market to be balanced at the end of this year, which could improve prices. Some analysts even expect a shift to a deficit in the 2019-20 crop year.

Arabica coffee prices touched a fresh 13-year low last month in New York, with traders aware of a possible large crop out of Brazil again next year, when the country will be back to the on-year in the production cycle.

The Italian processor normally buys its coffee from farmers with long-term contracts, paying a premium that averages 30 percent above New York futures.

Andrea Illy said that despite the poor performance of coffee prices recently, he sees positive demand in the years to come, mainly driven by the Asian market and the growth in consumption in China. (Reporting by Marcelo Teixeira; Editing by Sandra Maler)

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