Coffee price drops following revised USDA production estimate

The United States Department of Agriculture (USDA) has changed its outlook for the 2014-15 Brazil crop, causing Arabica coffee prices to drop to their lowest price in a month. The USDA released a revised upward prediction for Brazilian coffee production to 51.2 million 60-kilogram bags, a 1.7 million-bag increase compared to its previous estimate. The announcement of the revised figure came as a surprise to traders, who were expecting a lower yield following on from Brazil’s worst drought in decades. The USDA attributed the revised figure to better than expected agricultural yield in central-western Minas Gerais, Sao Paulo and Espirito Santo. The report puts Brazilian Arabica production at 34.2 million bags and the Robusta output estimate at 17 million bags. The USDA said that according to industry sources, bean size is significantly worse than the previous year. However, the overall coffee cup quality is better than 2013. The revised USDA estimate is still 3.3 million bags lower than the previous year.