BRAZILIAN COFFEE CROP ESTIMATES SHOW LIKELIHOOD OF TIGHT SUPPLIES

BRAZILIAN COFFEE CROP ESTIMATES SHOW LIKELIHOOD OF TIGHT SUPPLIES

Private estimates for Brazil's 1990-91 (May-April) coffee crop released last week showed a downward trend, which could lead to tight supplies and higher domestic prices during the second half of the year, market analysts said.

Two major private groups here released independent estimates last week, both of which showed a decline for the crop against their own previous surveys.Citoma, the Brazilian subsidiary of the U.K.'s Reyner, estimated the 1990-91 crop at 28.1 million 60-kilogram bags, down from the its January estimate of 30.8 million.

Unicafe, a major exporter, put the crop at 25.650 million bags, down

from its January forecast of 26.900 million.

In its last official estimate of the now-completed 1989-90 crop, the Brazilian Coffee Institute put the total at 23.6 million bags. The IBC also issued a forecast for the 1990-91 crop of 24.5 million bags. The IBC was abolished by Brazilian President Fernando Collor de Mello on March 16. No government body since then has offered an official final figure for the 1989-90 crop.

The latest estimates of the 1990-91 crop were considered "worrisome" by some in the market, even though this year's harvest should be slightly larger than last year's. The reason is that the 1990-91 harvest should be the ''large" harvest of the two-year coffee crop cycle.

''By rights, this year's crop should at least approach Brazil's theoretical production potential of about 35 million bags," said one trader, ''the fact that it merely repeats, more or less, last year's performance shows just how bad the situation is among growers."

Fernando Carvalhaes, a prominent Santos trader who visited the fine coffee producing region of Minas Gerais state last week, said "you still see some very nice, very well taken care of coffee plantations out there, but you also see that many producers have simply abandoned their coffee stands." At least part of the problem may be that Brazil simply has so many small producers - the overall total number of growers is 300,000 - that many have found it impossible to survive the nation's on-going economic crisis.

Traders and producer groups have been sounding an alarm about prices and costs since last year, noting that Brazil's high inflation and interest rates combined with comparatively low world prices led many producers to stop using fertilizer, insecticides and other treatments.

Indeed, the situation in many regions is considered so bad that most traders and market analysts here characterized last week's Citoma and Unicafe estimates as too high. "They're out of date," said one trader, "lack of rain in Sao Paulo, Bahia and parts of Minas Gerais has caused even more losses than anyone could have predicted."

Mr. Carvalhaes said he and his partners are currently estimating the 1990-91 crop at about 23.0 million bags.

Agronomist Jose Matiello, a former coffee crop analyst for the IBC, said the declining crop is evidence of a long-term trend toward lower productivity. He named the usual culprits for falling yields - inflation, poor training, high interest rates and input costs. "There has been a gradual decline in yields over the last five years," he said, "from about 13 bags for the 1984-85 crop to about 7.8 bags per hectare for the 1989-90 and the 1990-91 crops."

He said only about 30 percent of Brazil's total four billion coffee trees "receive adequate care" from plantation owners. "On many small plantations," he said, "the weeds grow so high that you can't see the coffee trees."

He argued that the long-term trend will be to abandon and finally eradicate unproductive coffee stands, taking marginal land out of production and reducing the total number of plantations.