Brazil's Coffee Traders Buy Few Beans On High Prices

Brazil's Coffee Traders Buy Few Beans On High Prices : SAO PAULO (Dow Jones)--Traders of Brazilian coffee are buying few beans as prices are near highs for recent years. "We are only purchasing coffee we really need at reasonable values," one trader based in the Brazilian port city of Santos told Dow Jones Newswires. The trader said his firm bought some New York 3/4 medium-to-good beans today.

ICE arabica coffee Thursday sank 1.3% for March delivery, giving back gains from a day earlier that set new 13 1/2-year highs. The contract closed at $2.3750 a pound. A shortage in Arabica beans, though, may push prices higher in the near term.

"There is a difficult supply situation," because production in Colombia is lower than expected, Gil Carlos Barabach, a coffee analyst at Safras & Mercado agricultural consultancy in Brazil's Parana state told Dow Jones Newswires.

Colombia is the world's second-largest producer of arabica coffee after Brazil, which is also the biggest exporter of the beans.

"Prices are the highest they have been in this millennium," according to Barabach. He referred to prices in the south of Brazil's Minas Gerais state for a 60-kilogram (132-pound) bag of 450 reais ($268.52) on Wednesday. Finer coffees were fetching up to 460 reais a sack, Barabach said.

Potential sellers of coffee are well capitalized after marketing their beans at a rapid pace in the last six months of 2010. Being well capitalized reduces pressure to sell beans to raise cash. "There is more interest in buying than in selling," Barabach said.

Torrential rains that fell over portions of southeastern Brazil, including the main coffee-producing state of Minas Gerais, do not threaten the crop now. "The rains are beneficial up to a certain point in the forming of the beans," Barabach said. The beans are being formed now after the flowering stage.

The rains also are not affecting shipments, according to a trader in Santos, Brazil's largest port where most of the country's coffee brokers are based. "There has not been much impact," said Harris Haase, a trader in the city.

The coffee market has shot up this year though the International Coffee Organization said output would rise 15% this year, said one Brazil-based trader. Colombia's crop estimate came in lower than expected, he said.

Brazil will produce an estimated 41.89 million to 44.73 million 60-kilogram bags of coffee in 2011, a supply unit of the country's agricultural ministry known as Conab announced last week. For the latest updates PRESS CTR + D or visit Stock Market news Today

Related Post: