Coffee growers in Brazil, the world’s largest producer, increased sales of last year’s crop over the past week as futures rallied in New York, according to brokers Flavour Coffee and Cazarini Trading Co.
Arabica coffee futures traded on the ICE Futures U.S. exchange climbed to as high as $1.475 a pound on March 5, the highest in a month. Farmers in Brazil have been holding back their coffee, with almost a third of last year’s output still to be sold, according to consulting firm Safras & Mercado. Harvesting of this year’s crop will start in about April for the robusta variety and about June for arabica beans.
“Producers took advantage of momentum and sold more stocks when New York was trading near the $1.50 a pound area,” Thiago Cazarini, a broker at Cazarini Trading in Varginha, in the state of Minas Gerais, said in a report e-mailed yesterday.
Cooperatives in the south of Minas Gerais, Brazil’s largest arabica-producing state, were “active sellers,” while exporters were also buying due to “favorable” costs, Rio de Janeiro-based broker Flavour Coffee said in a separate report also e-mailed yesterday. Growers have started to reduce stockpiles before the start of the new crop, according to Flavour Coffee.
Brazilian arabica coffee of good-cup quality was trading at a discount of 20 cents a pound to the price on ICE, unchanged from last week, Flavour Coffee data showed. Beans of fine-cup quality were at a discount of 10 cents a pound, also unchanged from a week earlier, according to the report.
Growers in Brazil will reap 47 million to 50.2 million bags of coffee this year, the government estimates. That would be a record for a year in which trees enter the lower-yielding half of a two-year cycle. Last year, the crop was an all-time high of 50.8 million bags as trees were in the higher-yielding year of the cycle.
Conillons, as Brazilian robusta coffee is known, were at a premium of 1 cent a pound ($22 a metric ton) to the price on the NYSE Liffe exchange in London for beans from the new crop, Flavour Coffee data showed. That’s down from a premium of 5 cents a pound last week, according to the broker.
“Local roasters were less active buyers,” it said.
Robusta coffee for delivery in May was up 0.1 percent to $2,156 a ton by 10:10 a.m. London time on NYSE Liffe. Arabica coffee for May delivery was down 0.1 percent at $1.429 a pound on ICE.
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.