Brazil's Farmers Refuse to Sell Coffee, Waiting on a Price Miracle
Brazil's Farmers Refuse to Sell Coffee, Waiting on a Price Miracle
(Bloomberg) -- Coffee farmers in Brazil, the world’s largest producer and exporter, are refusing to sell their beans after arabica futures dropped to the lowest in more than 13 years.
After collecting a record crop last year, growers face the prospect of another bumper harvest this season. That underscores why hedge funds are wagering on further declines. But farmers are hoarding their beans, hoping for a “miraculous” price recovery, Nelson Salvaterra, a broker at Rio de Janeiro-based Coffee New Selection, said in a telephone interview.
In the short run, the strategy may be doing more harm than good. While it’s helped to support domestic prices -- the discount for Brazil’s arabica beans versus New York futures has narrowed -- it’s made the nation’s commodity more expensive than supplies from competitors, Salvaterra said. That’s slowing the pace of Brazil’s exports, after a record shipment pace this season through February.
Brazilian exports of green coffee in March dropped about 20 percent from the prior month to about 2.6 million bags, and that pace is likely to hold in April, Salvaterra forecasts. A bag weighs 60 kilograms, or 132 pounds.
“The volume shipped is only covering previously agreed upon contracts,” he said.
To contact the reporter on this story: Fabiana Batista in Sao Paulo at fbatista6@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi, Christine Buurma
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