Coffee robusta harvest in Indonesia to fall on El Nino

Coffee production in Indonesia will probably drop 20% next year from a record as the strongest El Nino in almost two decades hurts crops in the world’s third-largest producer of robusta beans.

The harvest may slide to 560,000 metric tons in the year starting April 1 from 700,000 tons this year, according to the median of estimates from six traders and analysts.

A smaller Indonesian crop will potentially widen a global deficit of the beans used by companies including used by Nestle, and support prices that slumped 20% last year.

El Nino is largely responsible for the dryness in the fourth quarter of 2015 in Indonesia, says Rabobank.

It hampered cocoa crops in Ivory Coast, curbed the monsoon in India, and forced the Philippines to import more rice.

“We expect robusta prices to go up to above $1,580 a ton by mid 2016, as a double-whammy of a lower robusta crop in Brazil and in Indonesia hits the market from April,” said Rabobank.

While the output in Indonesia’s higher altitude lands was less affected by the drought, dryness damaged crops and wiped out harvests in some lowland areas in Sumatra and Java, said Hutama Sugandhi, head of Indonesian Coffee Exporters’ Association.

The provinces of Lampung, Bengkulu and South Sumatra are the main robusta areas in Indonesia.