ANALYSIS-Mountain of beans smothers Brazil plans to buoy coffee
* Goverment help seen drop in ocean
* Arabica prices half of record $3 level
BRASILIA, March 6 (Reuters) - The government of world top coffee grower Brazil will meet on Thursday to discuss supporting its coffee growers as prices for beans tumble, but with supplies aplenty, the market may not flinch even if Brasilia makes public purchases of beans.
Analysts say large private stocks and another big Brazil crop on the way are creating a glut of smoother arabica beans. But longer-term disease risks and a rebound in demand will create the global rally that government efforts will struggle to incite, they add
Producers, complaining that arabica futures have fallen to levels that make coffee unprofitable, have been lobbying hard in recent weeks for Brasilia to intervene.
Last month, New York's ICE May arabica contract hit $1.3760, its lowest level in more than two years and less than half the record highs seen in 2011 when prices shot to $3 per lb on supply concerns. On Wednesday, they were at $1.419 per lb, up 0.53 percent.
"Producers are very down," said Carlos Melles, president of the Cooparaiso cooperative in Minas Gerais state, which grows about half of Brazil's coffee. "At these rates (Minas) growers will end up pulling out trees in Brazil's biggest coffee area."
The heavy investment required to plant coffee fields makes such rash action unlikely. Meanwhile, the government is lending a sympathetic ear, promising to be open to "all options" when discussing growers' demands.
"The idea isn't to go back to $3 per lb. It was a high price and it won't return ... Now we are back at prices that don't cover production costs ... About $2 per lb is the price we want," said Silas Brasileiro, head of Brazil's main coffee grower's association, the CNC.
The CNC wants the government to extend annual cyclical loans to growers so they can pace sales of beans rather than rush to sell, to restrict supplies and firm prices. It also wants a special bonus last used in 2008/09 to be resumed, rewarding growers who sell above the market price and encouraging producers to collectively hold out for better rates.
Brasileiro said Agriculture Minister Mendes Ribeiro had assured him he was committed to providing help for growers. Senior officials from the agriculture, finance and planning ministries will take part in the meeting.
But with bloated private stocks and a big Brazil crop due by June, the government will be hard pressed to make a dent in a well-supplied market that has barely blinked at fungal disease ravaging Central American farms.
Arabica futures dipped sharply by 4 percent on Tuesday alone, even as Colombian growers kept up strike action, blocking roads in protest at low prices and rejecting a government offer to increase their subsidies.
Prices barely moved on Wednesday despite a stark warning from International Coffee Organization official Ricardo Villanueva who said fungal disease could slash Central American output about a third in the 2013/14 season.
All those bullish factors are being outrun by the prospect of a Brazilian crop of 47 million to 50.2 million 60-kg bags and private stocks in Brazil that jumped by 11 million bags or nearly 50 percent by Jan. 1 from a year earlier.
"They really need to make a big announcement, otherwise don't announce anything at all," said James Cordier, head trader at Florida-based Liberty Trading Group/Optionsellers.com, doubting anything but aggressive action would jolt the market.
The most recent aggressive government intervention into the coffee market was when it bought 1.5 million 60-kg bags of 2009 crop coffee. Prices were about 10 cents per lb less than they are now. Futures prices fell for weeks after that announcement.
The agriculture ministry has been encouraging growers to use hedging to reduce exposure to price volatility, but its director for coffee said that after such a steep drop in prices, it is open to whatever other proposals growers have.
Brazilian analyst Carlos Brando from Sao Paulo-based P&A Marketing, Liberty Group's Cordier and Shawn Hackett of Hackett Financial Advisors in New York both said immediate supplies were comfortable, but warned that situation could easily flip.
Liberty Group's James Cordier said signs coffee drinking was gaining popularity in China, a country of 1.3 billion people, could ignite a new and potentially "explosive" source of demand.
Hackett, meanwhile, said some roasters who switched to cheaper robusta beans when arabica prices surged in 2010 and 2011 were likely to start reverting to more costly arabica blends because of its narrowing price differential versus robusta.
"We're now going to see demand switching back over to arabica," said Hackett, who said leaf rust in Central America's would cause a "dramatic" decline in supplies of high quality arabica the region is renowned for.
That, on top of risks for Vietnam's robusta as bad weather conditions take their toll, were a recipe for a rebound on a scale government intervention would be unlikely to achieve.
"They just need to let the market do its thing," said Hackett.
(Additional reporting by Marcy Nicholson in New York; Editing by Leslie Gevirtz)