Brazil’s Coffee Discount Narrows as Exporters Purchase

Buyers of fine coffee from Brazil, the world’s largest producer, are getting a smaller discount for the beans, with futures sliding in New York and local exporters purchasing for September shipment, according to Flavour Coffee.

Fine-cup arabica beans were trading at a discount of 8 cents a pound to the price of the December contract on ICE Futures U.S. in New York, compared with 10 cents last week, data from the Rio de Janeiro-based broker showed.

Arabica coffee fell 0.4 percent this week as exchange- certified stockpiles rose to 1.895 million bags yesterday, the highest since October 2010, ICE data on Bloomberg showed. Inventories are gaining a boost from Latin American exports. Shipments from nine countries in the region rose to 2.95 million bags in July from 1.97 million bags a year earlier, Guatemala’s National Coffee Association said in a report on Aug. 21.

Exporters in the local market were buying beans for September, according to Flavour Coffee. “Volume of business finally improved after a couple of weeks of stagnant activities,” the broker said in the report.

Dry weather in the main arabica-producing regions has helped farmers gather this year’s crop after rains in June delayed harvesting. About 78 percent of all the beans have been picked in the southern Minas Gerais, 77 percent in Cerrado Mineiro, 93 percent in Zona da Mata and 78 percent in the state of Sao Paulo, Thiago Cazarini, a broker at Cazarini Trading Co. in Varginha, Brazil, said in a report e-mailed yesterday. Minas Gerais is Brazil’s biggest arabica-growing state.

Conillons Premium

Good-cup quality arabica beans were at a discount of 16 cents a pound, compared with 15 cents last week, Flavour Coffee said.

Buyers of conillons, as Brazilian robusta beans are known, are paying a premium of 15 cents a pound ($331 a metric ton) to the price on the NYSE Liffe exchange in London, unchanged from last week, according to Flavour Coffee data.

“The flow of coffee from producing areas has been somewhat jeopardized by the heavy rains in north of Espirito Santo and south of Bahia,” the broker said. “Internal roads were affected, making truck access almost impossible in some places.”

Some growing areas in Espirito Santo, Bahia and northeastern Minas Gerais will get rainfall in the next days, weather forecaster Somar Meteorologia said in a report e-mailed yesterday. Espirito Santo is Brazil’s main robusta-producing state. A bag of coffee weighs 60 kilograms (132 pounds).

Robusta coffee for November delivery gained 0.3 percent to $2,047 a ton by 9:58 a.m. in London. Arabica coffee for December delivery rose 0.4 percent to $1.6255 a pound in New York.

Arabica coffee is grown mainly in Latin America and favored for specialty drinks such as those made by Starbucks Corp. Robusta is harvested mainly in Asia and parts of Africa and used in instant drinks.

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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