The coffee prices, which tumbled on the back of the global financial meltdown in the past two months, are expected to bounce back because of anticipated shortfall in the coffee production in Brazil in the next crop year.

Since the beginning of the world economic crisis in September, the monthly average of the International Coffee Organisation (ICO) composite indicator price declined by almost 15%. The monthly average of ICO composite indicator price touched record high at 138.82 cents per lb in February 2008 but it tumbled to 108.31 cents per lb in October, a 14-month low, due to the ongoing economic crisis.

Coffee output in Brazil, the world’s biggest coffee producing country, is expected to decline by 20-22% in the crop year 2009-10 as the country has a biennial pattern in coffee production.

In the crop year 2008-09, Brazil?s coffee output is expected to climb by 27.5% to 46 million 60-kg bags compared to 36 million bags in the previous crop year. The year 2008-09 is expected to be the second largest crop ever recorded in Brazil, after 2002-03, when Brazil witnessed a production of 48.48 million bags. As per biennial cycle, Brazil will record smaller crop in the coming year, coffee industry sources said.

Moreover, according to ICO report, recent climatic disturbances in Central America and Colombia will have a negative impact on production in the crop year 2008-09, particularly in Colombia. Overall, the supply will be lower while world demand continues to expand.

Looking at these factors, an official attached to Coffee Board requesting anonymity said that the coffee prices are expected to climb by 15-20% in the next three-six months. In fact, currently the planters are harvesting fresh crop of Arabic since the last week of October in India. ?But the fresh arrivals in the local markets are comparatively low as the traders are hoarding stocks anticipating higher prices in the coming months,? the official added.

The Indian coffee grower also believes that the coffee prices will remain firm in the coming years following growing consumption.