An indicator price of robusta coffee kept by research institute Cepea hit R$329.92 a bag on Tuesday, up 2.0% on the day, and the highest on records going back to November 2001.
Cepea's arabica coffee indicator price rose by 3.5% to R$478.23 a bag, the highest in seven months.
The strong performances have been underpinned by weakness in the Brazilian real, which has raised the value in local terms of a commodity which is traded internationally in dollar.
However, the gains also came amid waning expectations for this year's coffee harvest, which has now finished for robusta beans but is still ongoing for arabica – with the size of both crops failing to meet some earlier expectations.
'Greater-than-expected losses'
The official IBGE statistics institute on Tuesday cut its forecast for the Brazilian robusta crop to 10.75m bags.And although the IBGE raised its estimate for the arabica harvest to 33.42m bags, that remains below many market expectations earlier of a 35m-bag harvest.
Commmerzbank said on Wednesday, of Brazil's overall coffee output prospects, that it "is becoming increasingly clear that the actual crop will end up in the lower range of the currently forecast spectrum of 40m-52m bags".
"The principal factor driving the price is the smaller domestic supply and greater international demand," Cepea said, noting also some withholding by producers of sales on ideas that "losses to the current 2015-16 crop will be greater than expected until now".
Vietnam squeeze
Export demand for Brazilian robusta beans began 2015 particularly strongly, running at more than double year-ago rates for the first five months, according to data kept by Cecafe.
Volumes were underpinned by supplies left over from a strong Brazilian harvest of the variety last year at a time when traders in Vietnam, the top robusta producer and exporter, have been delaying sales in hopes for higher international prices.
Vietnamese coffee exports are estimated officially at 1.09m tonnes in the October-to-July period, the first nine months of the 2014-15 marketing year, a drop of 23% year on year.
Brazil's robusta coffee export volumes in July, at 404,489 bags, fell 5.7% behind the year-ago figure, in what many investors have taken as a sign of tighter supply expectations, evident in higher prices, taking hold.
'Potential for damage'
Meanwhile, concerns over Brazil's coffee output prospects next year are being provoked by dry weather which, while speeding progress on the current harvest, is raising concerns over the imminent blossoming period for the 2016 crop.
Jack Scoville of US broker Price Futures said "sources in Brazil suggest that current hot and dry weather in Minas Gerais [Brazil's top arabica-producing state] is affecting flowering for the next crop, and Robusta production in the northeast has also been hurt
"The dry weather promotes good harvest progress but hurts flowering and it is the potential for damage to next year's crop" that has been supporting prices
0 Response to "Brazil robusta coffee prices forecast 2016"
Post a Comment