NEW YORK: Brazilian coffee is getting more expensive on the US physical market as producers there hold onto their beans from the recently harvested 2011-12 crop, US importers said. "Brazil (coffee) for the current crop has been really expensive. There's been some voluntary producer retention," said Christian Wolthers of coffee importer Wolthers America, based in Florida.
Arabica coffee futures climbed in an 11-month rally that ended at a 34-year high above $3 per lb in May, allowing many farmers to sell at exceptionally high prices. Now, Wolthers said, many Brazilian coffee producers who still have coffee left from the 2011-12 crop are holding onto their remaining beans for two reasons: either because of income taxes after making a higher-than-usual profit, and only selling for delivery in the 2012-13 marketing year; or they are waiting to see if there will be a squeeze in the market next year that could lift prices higher.
"Volume of exports out of Brazil is short compared to last year. It's not that the coffee wasn't sold it's just that it wasn't shipped, that's bringing the differential up," Wolthers added. Dealers said that Brazilian exporters have oversold.
Brazil exported 2.56 million 60-kg bags of green coffee in September, down from the 2.99 million bags shipped in the same month a year ago, the Council of Green Coffee Exporters, Cecafe, said earlier this month.
Differentials on the physical market widened, with many beans becoming more expensive. Arabica coffee futures trading on ICE had a volatile week of wide trading ranges up to 17 cents per lb, with macroeconomic factors leading the market one way and then the other.
On Friday, the benchmark December arabica futures were up 0.3 percent at $2.3535 per lb at 10:44 a.m. EDT (1444 GMT). Brazilian Santos 4 beans in US warehouses moved to an average discount of 1.5 cents under the ICE benchmark "C" contract, compared with 3.5 cents under a week ago. Santos 2/3 fine cup, strictly soft, rose to an average premium of 3 cents over, from 2 cents over the previous week.
Overall, physical coffee dealings in the Unites States were still relatively quiet. "Roasters had covered and the economy slowed down, so they're working through supplies right now," one US importer said.
November robustas trading on the London International Financial Futures Exchange (Liffe) were down 0.05 percent at $1,863 per tonne. Farmers in Vietnam, the world's largest robusta producer, held on to their beans because of falling prices in London, while Indonesian coffee changed hands at near-record premiums on lingering supply constraints, dealers said on Thursday.
In the United States, Vietnamese Grade 2, 5 percent, robusta beans dealt at an average premium of 15.5 cents over Liffe's November contract, from 14 cents over a week ago. Indonesian EK1 robusta beans rose to 17.5 cents over, from 15.5 cents over.