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Brazil government, banks may bump up loans to stock coffee


Reuters

August 18, 2012

Aug 17 (Reuters) - Brazil's government and private banks look set to boost lending to coffee producers, the national coffee producers' association, CNC, said on Friday, to tide them over when they choose to defer sales in the hope of receiving a higher asking price later.

The CNC said in an e-mailed bulletin that the government would vote at the end of August about adding 600 million reais ($297.10 million) to its Funcafe coffee loan program that would take its total funds this season to 1.8 billion reais.

The association said private lenders had also expressed an interest in allocating more loans to coffee producers and estimated an additional 1.2 billion reais could be made available.

If disbursed as the CNC hopes, the additional public and private funds would be enough to stock an additional four million bags of coffee or nearly a tenth of this year's harvest, should producers choose to use these credit lines.

Brazil is the world's top coffee producer and is now harvesting a harvest which the agriculture ministry has estimated at 50.45 million 60-kg bags.

The director for coffee at the agriculture ministry, Edilson Alcantara, told Reuters in March that the government was seeking to use credit to encourage producers to defer sales when they deemed prices inadequate.

New York arabica coffee futures touched an eight-week low on Thursday this week but recovered slightly on Friday. The December contract rose 0.9 percent to finish at $1.6320 a lb.

ICE certified arabica stocks continued to rise to the highest level in nearly two years, reaching nearly 1.85 million bags by Aug. 16, with more than 109,000 bags pending grading.

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