Bloomberg News

Brazil’s Arabica Coffee Discount Widens as Harvest Gathers Pace

June 01, 2012

Buyers of arabica coffee in Brazil, the world’s biggest producer, are getting a bigger discount for their beans, with harvesting having started in many of the main growing areas, according to Flavour Coffee.

Fine cup beans for shipment in July and August were at a discount of 12 cents a pound to the price on the ICE Futures U.S. exchange in New York, the Rio de Janeiro-based broker said in a report e-mailed yesterday. That compares with a discount of 9 cents a pound a week earlier.

Buyers of good cup quality coffee for July and August shipment were getting a discount of 17 cents a pound to the exchange price, up from 15 cents a pound last week, according to the report. Fine cup beans are usually more expensive because of their taste profile.

“Harvesting in arabica plantations has begun in Zona da Mata, Sao Paulo and Parana and parts of south of Minas,” the broker said in the report. Minas Gerais is Brazil’s biggest arabica-producing state, followed by Sao Paulo.

Brazil’s production will be a record 50.4 million bags of coffee in the 2012-13 season, according to the government’s crop forecasting agency known as Conab. Arabica coffee has fallen 30 percent in New York so far this year as traders sold the beans before the start of the harvest in Brazil.

Rains forecast in growing regions next week may interrupt harvesting in some areas, the broker said. The wetter weather may also affect the quality of the coffee already picked if farmers don’t protect beans from rainfall, according to the report.

Robusta Premium

Buyers of robusta coffee from Brazil, the world second- biggest grower of the variety, are paying a premium of 3 cents a pound ($66 a metric ton) to the price on the NYSE Liffe exchange in London for June and July shipments, unchanged from last week, data from the broker show.

Exports of the variety, used in instant coffee and espresso, will be “hardly above” 100,000 bags in May, down from 350,000 bags in the same period last year. Total coffee shipments for the month will be slightly above 2 million bags, the broker estimated. A bag of coffee weighs 60 kilograms (132 pounds).

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.


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