Brazil's largest coffee cooperative, Cooxupe, said the estimated 21.8 million 60-kilogram bags in private stocks isn't enough to meet total coffee demand.

The National Commodities Supply Corp., or Conab, said that private coffee stocks could be as high as 21.8 million 60-kilogram bags as of Sept. 30. Conab is part of Brazils Agriculture Ministry. Private stocks are held by coffee cooperatives and warehouses owned by coffee exporting firms.

"Let's assume there are 21.8 million bags of coffee in private hands, and we think that is the case. That means we will be holding on to the last coffee bean until May," said Lucio Dias, superintendent director of Cooxupe.

Dias said he agreed with the government's estimate, but doubted in the near future the estimate would be revised upward.

Of the 1,007 coffee producers and warehouses that responded to the government's questions, 20% didn't provide any data.

That would put the government's actual count at 17.6 million bags of coffee that is supposed to last into June, when Brazil will harvest its 2006-07 crop. Conab added 20% to the 17.6 million to come up with 21.8 million.

Eduardo Carvalhaes, a partner at coffee brokerage firm Escritorio Carvalhaes, said he agreed with Dias' analysis.

In separate telephone interviews, both men calculated domestic demand and monthly export averages to arrive at the conclusion that demand for Brazilian coffee has fallen in line with supply, if not superceded it completely.

"The number Conab put out looks high, but it shows that we are going to have a tight next six months," Carvalhaes said, adding that the estimated 21.8 million bags, calculated as of Sept. 30 data, has already been reduced by half.

Brazilian consumption alone has been averaging 1.3 million bags since January with exports of green and soluble coffees averaging about 2.1 million bags per month.

Assuming similar averages in December, Carvalhaes and Dias said that Brazilians would have already consumed roughly 3.9 million bags of coffee and exports would have taken away another 6.3 million from October to December. That leaves 11.54 million bags in stocks by the end of 2005, Cooxupe and Escritorio Carvalhaes said.

"That has to last until June," Carvalhaes said. "Even if you calculate an export drop to 1.8 million bags per month over the next six months, that's nearly 11 million bags right there."

The Brazilian Coffee Producers Association estimated that Brazil would consume 16 million bags of coffee in 2006.

A conservative monthly estimate would put domestic consumption at about 1.3 million bags or 15.5 million bags annually, Dias said. Between now and June, that means an additional 7.7 million bags of coffee will be consumed domestically.

"In the next six months, domestic demand and exports will require 18 million bags," Carvalhaes said.

Tight supply pushed Brazilian coffee differentials up on Wednesday, according to investment banking firm Hedging Griffo. Swedish medium to good cup coffee was eight cents below the New York Board of Trade prices for December through February compared to nine cents on Dec. 12.

This is Conab's second estimate of private stocks. The first estimate, done on March 3, had a figure of 12 million. Coffee is harvested in Brazil between June and September.

This is the first year Conab released the private stock data.

Conab estimates that the 2006-07 coffee crop will be between 40.4 million and 43.5 million bags. (Dow Jones)