Coffee rust threatens coffee production in Mexico

An unusual contamination and aggressive fungus Roya in the coffee plantations of Chiapas, Mexico, is threatening to reduce the country's coffee production in crop 2012/13, said Rodolfo Trampe, president of the Mexican Association of Coffee Production (Amacafe).
According to the executive, the production has the potential to grow to 20% in this cycle, compared to 2011/12, but the outbreak threatens that balance. Last season, Mexico harvested 4.3 million bags, according to data from the International Coffee Organization (ICO).
Chiapas accounts for about a third of the annual production of the country and borders the Central American region began experiencing problems with the fungus last season. The reduced production of these countries could help sustain commodity prices in New York Stock Exchange (ICE Futures U.S.), according to analysts.
"I believe that the coming months will be important because people will begin to see what kind of expectations we can have on the season 2013/2014", said Keith Flury, commodities analyst in Rabobank. "If production falls more than expected in these countries, I believe that will affect the market significantly", he added. Keith Flury still assesses that low prices can discourage farmers to invest in combating the disease, which requires multiple applications of an expensive fungicide.
Source: Dow Jones