Brazil, the world’s largest coffee producer, delivered beans to ICE Futures U.S. for the first time since the bourse started accepting bags from the South American nation as this year’s harvest picks up.
The New York-based exchange approved 320 bags of Brazilian coffee this week and the beans are stored at a warehouse in the city, ICE data showed. Brazil will harvest 53 million bags of coffee in the 2013-14 season, a record for a year in which trees enter the lower-yielding half of a two-year cycle, Kona Haque, an analyst at Macquarie Group Ltd. in London estimated in a report e-mailed today. ICE started accepting beans from Brazil in March this year. A bag of coffee weighs 132 pounds.
“Brazilian growers are probably sending bags to grading as the new crop is starting and beans are beginning to flow,” Andrea Thompson, the Belfast, Northern Ireland-based head of research and analysis at CoffeeNetwork, a unit of broker INTL FCStone Inc., said by phone today. “A weaker real could be a factor but I don’t think it’s very significant.”
Coffee neared a four-year low in New York yesterday amid a markets rout that erased more than $1.8 trillion from the value of global equities. Prices slumped as Chairman Ben S. Bernanke said the Federal Reserve may end economic stimulus should risks to the U.S. economy continue to decrease. A weaker Brazilian real also helped push prices lower, Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report today. A lower real makes sales of coffee priced in dollars more attractive.
The Brazilian real dropped to a four-year low yesterday, prompting the central bank to intervene for a third day this week to stem the selloff. The currency slid for a fifth day, depreciating 1.5 percent to 2.2575 a dollar yesterday, the weakest on a closing basis since April 2009. The real and the Mexican peso are the biggest losers in the past month among 24 emerging-market dollar counterparts tracked by Bloomberg.
The grading of Brazilian beans to be delivered to the exchange comes after an exporters’ group said last month it may ask ICE to review the price it pays for the beans. Coffee from the South American nation is delivered at a discount of 9 cents a pound against the bourse’s benchmark arabica futures contract. That compares with a 4-cent discount for supplies from the Dominican Republic and Ecuador and a 2-cent premium for beans from Colombia, the world’s second-biggest arabica grower.
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