Coffee bean prices, along with a related exchange traded note, are looking perkier as traders bet that the plunge in prices last year could deter farmers from overproducing in 2014.

The iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN (NYSEArca: JO) gained 3.2% Wednesday. JO is up 7% so far this year, after dropping 30.8% over the past year.

The ETN broke above its short-term, 50-day moving average last month and held steady after testing its short-term trend line at the turn of the new year. [Coffee ETN Percolates on Supply Squeeze]

ICE Coffee “C” futures, the world benchmark for Arabic coffee, was up 3.1% Wednesday, trading around $120.9 per pound. Coffee prices are up close to 9% this year.

Traders are weighing the likelihood that Brazil, which makes up a third of the world’s annual coffee output, could trim crops and cut back on fertilizer in an attempt to harvest an smaller-than-expected crop, reports Leslie Josephs for the Wall Street Journal.

“It does make sense that Brazil’s crop might not reach its full potential,” Rodrigo Costa, trading director at Caturra Coffee Corp., said in the article. “If anything, the surprise (in price) will be to the upside.”

Volcafe Ltd., a unit of commodities trade house ED&F Man Holdings Ltd., lowered its November forecast for Brazilian coffee crops next season by 15%.

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