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Supply Chain

Coffee Traders Pin Hopes On Brazil For Robusta Beans As Prices Soar

By Reuters
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Coffee Traders Pin Hopes On Brazil For Robusta Beans As Prices Soar

Coffee traders scrambling to supply roasters with robusta beans are pinning their hopes on Brazil, as prices for the bitter bean typically used to make instant coffee hit 12-year highs after exports from top producer Vietnam slid.

Vietnamese farmers have almost no stock left to sell after downsizing their coffee cultivation area to grow more profitable passion fruit and durian instead, leaving the market exceedingly tight.

Traders hope Brazilian exports will rise to fill the gap as the world's second largest robusta producer begins harvesting this season's crop, expected to hit a new record of around 23.15 million bags.

Record Crop

Although the country also harvested a record crop of around 22.92 million bags last season, its exports plunged 53% in the ten months to end April thanks to soaring local demand, according to data from exporters group Cecafe.

But industry experts say robusta shipments should grow this year due largely to a rebound in Brazil's output of arabica which, more fragile than robusta, was damaged by drought and frost in the last two seasons.

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'More Robusta Available'

"We suspect (Brazil's) domestic industry will take a lot of the off-grade arabica, which means there should be more robusta available for export," a veteran coffee industry expert told Reuters.

Cecafe head Marcio Ferreira said he expects robusta shipments from Brazil to improve in the coming months as local prices ease. The veteran industry expert expects global prices LRCc2 will head lower once this happens.

Brazil's robusta exports typically pick up between June and September.

'Tricky Environment'

Vietnam, traders say, front-loaded exports in the current season, which runs from October to September. Customs data shows shipments shot up nearly 14% last year but are down 5.5% in the first four months of this year.

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"It's a very tricky environment (right now) because the current Vietnam crop is about 90% sold. Where the (Vietnam) coffee will come from in the next couple of months, I don't know," said a Europe-based trader.

Indonesia

Things are not much improved in Indonesia, the world's third largest robusta producer, where traders see output in the May to July harvest down 20-30%.

An Asia-based trader told Reuters it is near impossible to buy robusta beans in Vietnam at the moment, and very expensive to secure them in Indonesia.

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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