Coffee growers in Brazil, the world’s largest producer of the commodity, are holding back beans as prices continue to fall, limiting the volume of trades, according to brokers Flavour Coffee and Cazarini Trading Co.
Arabica coffee futures traded in New York have fallen 33 percent so far this year partly because of a bigger crop in Brazil and rising stockpiles. The commodity is the worst performer in the Standard & Poor’s GSCI index of 24 raw materials. Coffee inventories in warehouses monitored by ICE Futures U.S. stood at 2.43 million bags, the highest since April 2010, exchange data on Bloomberg showed.
“Current falling prices are keeping producers and cooperatives aside of the market,” Flavour Coffee said in a report e-mailed yesterday. “Much less volume is being offered.”
Exporters are also not buying as the price offered by producers would mean a loss for them, Flavour Coffee said. The discount being given by producers for their beans is still not low enough to attract new sales, Thiago Cazarini, a broker at Cazarini Trading in Varginha, Brazil, said in a report e-mailed yesterday. Varginha is in Minas Gerais, Brazil’s biggest arabica-producing state.
“Differentials remain firm and it has been very hard, more than before, to add new sales to the books,” Cazarini said, referring to a discount or a premium paid to obtain physical coffee in relation to the price on the futures market.
Fine-cup arabica coffee beans from Brazil were trading at a discount of 8 cents a pound to the price on ICE, unchanged from the previous week, according to Flavour Coffee data. Good-cup quality coffee was at a discount of 19 cents a pound, compared with 18 cents a pound last week. Fine-cup beans are usually more expensive because of their taste profile.
Conillons, as Brazilian robusta beans are known, were at a premium of 18 cents a pound ($397 a metric ton) to the price on the NYSE Liffe exchange in London, up from 15 cents a pound a week earlier, according to Flavour Coffee data.
Robusta coffee for January delivery slid 0.2 percent to $1,963 a ton by 10:09 a.m. in London. Arabica coffee for December delivery declined 0.1 percent to $1.512 a pound in New York.
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.