Demand for robusta coffee used mostly in instant-drink mixes jumped 5 percent in the past year, spurred by emerging markets, according to Tristao Cia. de Comercio Exterior, an exporter and roaster in Brazil.
“A lot of the coffee-consumption growth we’ve seen occurred in countries where instant coffee is preferred,” Sergio Tristao, the president of the Vitoria, Espirito Santo- based company, said today during an interview at an industry conference in Charleston, South Carolina.
The company, founded in 1935 by Sergio’s grandfather, Jose Ribeiro Tristao, is one the four biggest manufacturers of instant coffee in Brazil, the world’s top grower and exporter of the commodity.
Brazil will produce 55 million bags of coffee this year, up from 48 million in 2011, Tristao said. The 2012 harvest will include about 15 million bags of robustas, known locally as conillon, and the remainder will be arabica beans favored by specialty brewers including Starbucks Corp. (SBUX), he said. One bag weighs 60 kilograms, or 132 pounds.
The harvest traditionally has alternated between high and low biennial cycles. The difference from one year to next is shrinking as well-capitalized producers increase fertilization and more farmers add irrigation, reducing the wide swings in yields, Tristao said.
Arabica coffee may trade at $1.50 to $2 a pound on ICE Futures U.S. in New York for the rest of the year, he said. The price closed today at $1.7875, down 42 percent since reaching a 14-year high of $3.089 in May.
“What happened last year was that more people came into the market betting that consumption will increase with the world population, faster than production,” Tristao said. “Now we have a more balanced supply and demand growth.”
Robusta-coffee futures that closed at $2,033 a metric ton today on NYSE Liffe in London may find support around $2,000, he said.
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