The coffee market faces a "period of reckoning" in discovering how significantly the poor start to Colombia's mitaca harvest reflects longer-term setbacks, veteran analyst Judith Ganes-Chase said.
Colombia's coffee output in April, the first month of the mitaca harvest, tumbled 20% year on year to 834,000 bags – the weakest monthly figure for more than two years, data from Colombia's Fedecafe producers' group shows.
Ms Ganes-Chase said that the decline followed "much speculation" over the crop, following rains early in the year which some observers said had affected flowering.
However, it is unclear yet how much of the April figure represented merely delays in production, thanks to delayed blossoming, or more permanent production losses.
'Period of reckoning'
"There has been speculation about this crop all season, and the period of reckoning is finally here," said Ms Ganes-Chase, of J Ganes Consulting.
"However, it is too soon to say it is disaster or major problem for the market after a strong performance for the main crop harvest," which started in October.
"Depending on how reduced the secondary crop figures are hereafter, the final season figure may still match or exceed the US Department of Agriculture prior estimate."
The USDA, whose data set industry benchmarks, forecasts 2016-17 coffee output from Colombia – the third-ranked grower after Brazil and Vietnam - at 14.5m bags a rise of 500,000 bags year on year.
'Vulnerability for disease'
In fact, much may depend on further rains which are falling in some coffee growing districts, adding to concerns of harvest delays, besides provoking some worries over results too.
"Rains could mar production prospects and slow the harvest even further.
"It also could lead to vulnerability for disease under too wet conditions."
'May is known for rallies'
Ms Ganes-Chase flagged the potential for support to prices too from a seasonal worry over winter frost in Brazil, which can hit as early as late May.
Thanks to Brazil freeze fears, "the month of May is known for rallies and already this month the market has bounced from the lows.
"Given the plunge in price in April, it would be natural to see the market snap back.
"Already southern Brazil saw a blast of cold but it was not near the coffee region," she added.
Exports vs stocks
However, Ms Ganes-Chase urged investors not to trend too bullish over International Coffee Organization data showing a drop in exports, year on year, in March, even though this trend looks like continuing for the rest of 2016-17, which ends in September.
"While the month-to-month figures hereafter may be less, it is also important to watch the cumulative total and what happens to consumer stocks," she said.
And with inventories in consuming countries at "comfortable levels", hitting a 23-year high in the US, "a modest drop in exports won't create tightness, but simply keep consumer stocks from piling up much more than they have".
Even if producers have "front loaded" bean marketing and "are out of coffee to sell, that doesn't imply tightness if the coffee is sitting in stock elsewhere and still available".
Ukr Agro Consult |