Brazil's Arabica Discount Narrows as ICE Futures Decline
Buyers of coffee from Brazil, the world’s largest producer, were getting a smaller discount for arabica beans this week, with futures in New York sliding, according to Flavour Coffee and Cazarini Trading Co.
Fine-cup beans were trading at a discount of 6 cents a pound to the price of the December contract on ICE Futures U.S. in New York, from 8 cents a pound last week, data from Rio de Janeiro-based broker Flavour Coffee showed. Good-cup quality beans were at a discount of 16 cents a pound from 18 cents a pound last week, it said in a report e-mailed yesterday.
Arabica coffee futures fell 2.7 percent this week as stockpiles of beans certified by the exchange climbed to 1.994 million bags, the highest since 2010. The price dropped 29 percent this year. Fine-cup quality beans are usually more expensive than good-cup ones because of the taste profile.
“Most of the exporters are sidelined for both purchases and sales,” Thiago Cazarini, a broker at Varginha, Brazil-based Cazarini Trading, said in a report e-mailed yesterday. “Differentials tightened 2 to 3 cents a pound in the past two weeks,” he said, referring to a discount or a premium that buyers have to pay to obtain physical coffee in relation to the price on the futures market.
Coffee production in Brazil will rise to 50.5 million bags this year from 43.5 million bags a year earlier, as arabica trees entered the higher yielding half of a two-year cycle, the Agriculture Ministry said yesterday. That compares with a May 10 estimate of 50.4 million bags.
Buyers of conillons, as Brazilian robusta beans are known, are paying a premium of 14 cents a pound ($309 a metric ton) to the price on the NYSE Liffe exchange in London, up from 13 cents a pound last week, according to Flavour Coffee data.
“The local market was again firm even with the lower Liffe,” Flavour Coffee said in the report. Robusta coffee futures declined 2.3 percent this week.
Robusta coffee for November delivery was up 0.9 percent to $2,030 a ton by 10:10 a.m. in London. Arabica coffee for December delivery rose 1.5 percent to $1.606 a pound in New York. 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.