* Colombia sees 2011 coffee output at 9-9.5 mln bags
* Country suffered two years of below average production
* January production soared 76 percent vs year ago
BOGOTA, Feb 24 (Reuters) - Colombia's coffee production this year is expected to reach at least 9 million 60-kg bags, the highest level since 2008, as better weather helps flowering, the country's coffee federation said on Thursday.
Colombia, the world's top producer of high-quality washed arabica, has experienced lower-than-average output for the past two years due to bad weather conditions and a program to replace aging trees with younger, more productive ones.
The Andean country produced 8.9 million bags last year and 7.8 million in 2009. In 2008, it produced 11.1 million bags, about its historic annual average.
"What are we seeing? That probably we will pass production of last year and should reach a range of around 9 million to 9.5 million. But we have to wait and see because in farming precise figures are always an adventure," national coffee federation director Luis Genaro Munoz told reporters.
Benchmark May arabica coffee futures <KCc2> fell 3.70 cents, or 1.4 percent, to $2.6575 per lb, dropping for the second straight day on long liquidation as commercial buying appeared to have dried up. This drop follows Tuesday's surge to the highest level in more than 30 years at $2.7840 per lb.
"This just adds another needle to the haystack in terms of the weakening sentiment we're starting to see here, in the short term," said Luis Rangel, vice president for commodity derivatives with ICAP North America in Jersey City.
The coffee federation in the past has set production forecasts only to whittle them down through the year to lesser targets. Last year Colombia fell just short of its annual target of 9 million bags, after originally forecasting output at as much as 12 million bags.
SEASONAL PRESSURE
Arabica coffee futures trading on ICE Futures U.S. are also beginning to feel seasonal pressure and long liquidation after attracting speculative interest that lifted the market to the highest in more than 30 years earlier this week, dealers said.
"In the short-term the market is experiencing too much speculative interest at the higher levels and not enough commercial demand," Rangel said. "The risk is that speculators continue to drive the prices higher."
ICE arabica futures have doubled in price over the past eight months in a rally triggered by fund buying and sustained by concerns about global tight supplies of washed beans.
"It helps to give them a bit of breathing room," said Bill Raffety, senior analyst for futures brokerage Penson Futures in New York, referring to Colombia's higher crop forecast.
Prolonged adverse weather conditions and flooding had trimmed coffee production and also has hurt output in robusta bean producers Indonesia and Vietnam.
The federation says that, with more favorable weather, advances in the rejuvenation program and adequate fertilization, Colombia could reach its official production target of 14 million 60-kg bags in around three years.
January production soared 76 percent to 908,000 bags from a year ago as better weather helped Colombia recover to its historic monthly output levels.
But, while weather has improved, analysts have warned that rising oil prices could affect fertilizer costs, and force farmers to use less of the chemical.
The federation is also trying to replace aging trees with new ones that are more resistant to roya fungus.
Colombia has replaced around 70,0OO hectares (173,000 acres) of trees a year since it began rejuvenation and reached 80,000 hectares (198,000 acres) in 2010. This year the federation expects to replace 100,000 hectares (247,000 acres) of old trees under the project.
Source”: (Additional reporting by Marcy Nicholson in New York, writing by Patrick Markey; Editing by Walter Bagley) ((pat.markey@reuters.com, +57-1-634-4090, Reuters messaging:
pat.markey.reuters.net@reuters.com))
