Existing contracts with
Starbucks, Nestle, others honored
By
Gustavo Bonato
August 6, 2012
SAO
PAULO, Aug 6 (Reuters) - Brazil's Cooxupe, the world's largest coffee
co-operative, said on Monday that it would halt new spot export business until
September, when the current harvest is over and it has a better sense of the
supply of top-quality arabica beans.
Top-quality
arabica beans would only make up about 56 percent of Brazil's total 2012/13
arabica crop due to untimely rains during the harvest period, down from 80
percent in past crops, said Joaquim Libânio Ferreira Leite, Cooxupe's head of
sales.
"Our
house has a reputation for producers of very fine coffees. I can't promise my
clients something and tomorrow frustrate them by not delivering," said
Leite at an agricultural seminar in Sao Paulo.
He said
the co-op would continue to deliver on its long-term contracts to buyers such
as Starbucks Corp and Nestle SA but simply did not want to close any additional
spot contracts that would jeopardize that co-op's ability to cover its existing
contracts due to tight supplies post harvest.
"We
plan to return to exporting in greater volumes again by September. Through
August, we have more clear cut business," Leite said.
Cooxupe
does business in long-term coffee supply contracts but also has a trading
operation and typically robust spot and short-term export coffee business in
the port of Santos, Brazil's main coffee export corridor.
One U.S.
coffee buyer, when asked why New York ICE futures didn't react to the news,
said he felt it was already priced into the market.
"People
have been talking about the rain damage there for some time now and I think a
lot of people tend to view stories like this from Brazil as more designed to
try and move the market, so they ignore them," said the buyer, who wished
to be unnamed.
Brazil's
current coffee is seen at 50.45 million 60-kg bags, comprised of 38.13 million
bags of arabica and 12.31 million bags of robusta, the agriculture ministry
said in its second official forecast of the crop.
Harvesting
started in May and will carry on for a few more weeks. Roughly 70 percent of
the crop has been harvested, which is well behind past years due to atypical
rains in May and June, analysts said.
Leite
said 50 percent of the coffee in Cooxupe's area had been harvested and added
that producers in the area are selling low quality coffees for 250 to 300 reais
($125-$150) a 60-kg bag and top quality arabicas for 450 to 480 reais a bag.
The wet
weather also deteriorated the quality of the arabica crop that was ready to
harvest at the time, causing beans to ferment and take on bitter flavors.
Cooxupe
maintained its previous forecast of harvest reaching 5 million bags in the area
of its associated producers, in south Minas Gerais. That state that accounts
for 50 percent of Brazil's coffee output.
Brazil is
the world's leading producer and exporter of coffee.