

Coffee production in Brazil, the world’s biggest grower, may drop to the lowest in four years in 2011, pushing up prices as trees enter the lower-yielding half of a two-year cycle, Agriculture Minister Wagner Rossi said.
Growers will harvest 37 million bags, down 23 percent from 48.1 million bags estimated for this year, Rossi said in an interview in Brasilia today. Coffee prices will likely rise next year as global demand outpaces supplies amid declining stockpiles, he said.
“Prices will likely remain on a steady rise,” Rossi, 67, said at his office. “World demand is firm and global stockpiles are low.”
Coffee, which has surged 72 percent this year, extended a rally to a 13-year high earlier today on concern adverse weather in Brazil and India will pare global supplies. Arabica coffee for March delivery reached $2.4225, the highest since June 1997. It fell 1.6 percent to $2.3005 per pound at 12:51 p.m. on ICE Futures U.S. in New York.
Output in Brazil, which ships about a third of world exports, usually drops every other year because trees can’t sustain high yields for two straight harvests. Fungus that was found in coffee crops in southeastern Brazil because of excess rains won’t hurt production, Rossi said.
“The coffee blight is a problem but not a threat to output,” Rossi said. “The improvement in farmers’ income will help them fight the fungus by investing more in their crops.”
Commercial farm lending may rise in the crop year that began in July as growers invest more in machinery and increase planted area to benefit from rising commodities prices, Rossi said. Lending grew 29 percent in the past harvesting season to about $49.8 billion, the ministry said. Bloomberg
Standard & Poor's Ratings Services raised its outlook for Green Mountain Coffee Roasters Inc. partly on the likelihood the company will be able to successfully fold Van Houtte into its coffee business.
Green Mountain announced in September that it was buying Van Houtte, a Canadian specialty coffee company, for $890 million.
S&P boosted Green Mountain's outlook to "stable" from "negative" on Tuesday. Aside from the Van Houtte buyout, the ratings agency said expectations for continued adequate liquidity and the likelihood of margin expansion contributed to the outlook change.
S&P maintained a preliminary "B" corporate credit rating for the company based in Waterbury, Vt. It also reiterated preliminary "B+" issue ratings for Green Mountain's $1.45 billion senior secured credit facility.
Shares of Green Mountain Coffee Roasters added 77 cents, or 2.3 percent, to $34.45 in afternoon trading. Over the last year, the stock has traded in a range of $19.86 to $37.97.
Businessweek