Bloomberg News

Low Temperatures in Brazil Coffee-Growing Areas May Hurt Trees

July 13, 2012

Low temperatures in coffee-growing areas over the weekend in Brazil, the world’s largest producer, may hurt some trees, according to broker Flavour Coffee.

A cold front will bring low temperatures to cultivation areas in the southern part of Minas Gerais, the biggest arabica- producing state, Somar Meteorologia said in a report yesterday. Temperatures will reach 1 degree Celsius (34 degrees Fahrenheit) in high places in the region, the weather forecaster said, adding that there was no risk of frost in growing areas and some trees could “feel the effects of the cold air.”

“Generally speaking, young trees if exposed to low temperatures tend to suffer more than adult and old trees,” Rio de Janeiro-based Flavour Coffee said in a report e-mailed yesterday. “Temperatures should drop considerably, perhaps even reaching freezing in some high districts.”

Rains in growing areas in June delayed the start of the crop and are resulting in “poor” quality beans, Flavour Coffee said. Most of the coffee traded this week was from the 2011-12 season that ended last month, according to the report.

“The volume of new sales on exporters’ books is below, much below historical Brazilian arabicas participation on FOB market at this time of the year,” Thiago Cazarini, a broker at Cazarini Trading Co. in Varginha, Brazil, said in a report e- mailed yesterday. He was referring to the export market.

Buyers of fine cup coffee for shipment in September to December are getting a discount of 12 cents a pound to the price on the ICE Futures U.S. exchange in New York, unchanged from last week, the broker said. Good cup quality beans for August and September are trading at a discount of 20 cents a pound to the exchange price, also unchanged, data from the broker show.

Price Difference

Fine cup quality beans are usually 3 to 4 cents more expensive than good cups, according to Flavour Coffee. Rains are set to reduce the availability of fine cup coffee, helping widen the price difference between the two.

“The issue so far is more one of delays and a loss in quality, rather than quantity of bags,” Judy Ganes-Chase, president of Katonah, New York-based J. Ganes Consulting LLC, said in a report e-mailed yesterday. “Usually, this would be reflected more differentially than on an outright basis.”

Buyers of conillons, as Brazilian robusta coffee is known, are paying a premium of 7 cents a pound ($154 a metric ton) to the price on the NYSE Liffe exchange in London for July and August shipment, according to Flavour Coffee data. That is unchanged from last week.

“Local roasters and soluble industry were active buyers,” the broker said.

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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