Roya Outbreak Could Hurt Mexico’s Coffee Harvest in 2012-13

By Jean Guerrero

MEXICO CITY–An unusually aggressive attack of a coffee-eating fungus in Mexico’s top coffee-producing state of Chiapas is tempering expectations for the country’s 2012-2013 harvest, a top Mexican coffee official said Tuesday.
Rodolfo Trampe, president of the Mexican Association for Coffee Production, or Amecafe, said in an interview that output has the potential to rise up to 20% this season from 2011-2012, but that the outbreak of the fungus, known as roya, poses a threat to that forecast.
Last season, Mexico produced 4.3 million 60-kilogram bags, according to the International Coffee Organization. The coffee season in Mexico began Oct. 1 and runs through September of this year.
“We’ve had roya since the 1970s when it arrived in Mexico, but in an incipient form that producers could live with,” Mr. Trampe said. “This is a more virulent case, atypical.”
Chiapas, responsible for about a third of the country’s annual harvest, borders Central America, which began seeing widespread roya problems last season.
The largest Central American producers, Guatemala and Honduras, are seeing some of the worst and most unexpected of the damage.
The region from Mexico down to Colombia produces almost all of the world’s washed arabica beans, which fetch a premium to prices on the InterContinentalExchange and are used in gourmet, sometimes single-origin roasts.
Roya is known to cause long-term damage rather than immediate harm, so it is not yet a concern for traders. Arabica coffee futures are hovering at slightly above $1.50 per pound, half what they were two seasons ago.
But analysts say prices may react to the threat in the near future as the extent of the damage becomes clear.
“I think in the next couple of months, it is going to be important, because people are going to start looking at what kind of expectations we should be getting out of the 2013-2014 season,” said Keith Flury, senior commodities analyst for Rabobank. “If there’s much less expected production in these countries, I think it’s going to impact the market quite significantly.”
Moreover, he said, the current lower prices mean producers have less incentive to combat the roya outbreak, which requires repeated applications of an expensive fungicide. A lack of proper attention to plantations is expected to aggravate the problem.
“Producers are not interested in putting in these costly inputs into their crops if prices are sitting at around $1.50,” Mr. Flury said.

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