Plantation Overview: Coffee--Brazilian frost damage adjudged minimal

This post was last updated on : 13 August 2011 at 22:00 IST

Commodity Online
You can breathe easy, as the damage to Brazilian Coffee plants subjected to a cold burst is adjudged minimal. The event was reported on August 5 when frost struck heart of Brazil’s southeastern coffee growing belt in the early hours of Friday.

Brazilian coffee catching cold necessarily sends shivers down the spines of players like Starbucks and all coffee lovers. In a bout of cold attack in 1970s and 1990s, coffee crops in Brazil were decimated.

But, the current cold attack which came calling has however spared the crops this time around, according to coffee co-operatives there.

“Damage from a frost that swept over Brazil's southeastern coffee belt on August 5 should be light in some of the areas hit in the south of Minas Gerais state, cooperative Minasul said Monday”, Reuters reported, adding, “few of its members' plantations were affected by the freeze.”

Minas Gerais coffee output accounts for half of the coffee production in the world's No. 1 producer. Minasul co-operative alone handles about 1 million bags (almost 2 percent) of Brazil's crop each year.

The news was widely welcomed as the coffee supplies have been tight for the year and prices had breached record levels.

But Cooxupe, Brazil’s largest cooperative which alone trades around a tenth of the Brazilian crop each year, admitted later that around 4,400 hectares (10,870 acres) of its members' plantations were affected in Minas Gerais and in neighboring Sao Paulo.

Finally, on Wednesday, Somar, the weather forecaster of Brazil predicted that the cold front could bring some rain but no frost, and no further cold spells at least until late August.

Meanwhile Coffee climbed in London on Friday charting the biggest weekly jump as on June 2010 attributed to fall in European stocks-- tracked by NYSE Liffe--for a second time, Bloomberg reported. This is despite the slid in S&P GSCI Index of raw materials for a third day this week.

November Robusta Coffee jumped $26, or 1.2% , to touch $2,246 a ton by 9:46 a.m. on NYSE Liffe in London on August 12. Prices of the variety are up 8.9% this week and on Friday marched ahead for a fourth day, the longest winning streak since June.

December Arabica climbed 0.85 cent, or 0.3 percent, to $2.449 a pound on ICE Futures U.S. in New York, Bloomberg report added.

Colombian coffee: Farmers fret

In the meantime Colombian coffee farmers—makers of high quality Arabica beans and pillars that perches the country’s status as the No.1 producer of the same--are fretting over main harvest as they may miss the 2011 output target of 9 to 9.5 million bags subsequent to heavy La Nina rains battering the country.

Later, reports suggested that the country saw a fall in coffee output for July at 530,000 60-kg bags, a dip at least by 33% Y-O-Y. Also, exports declined by about 25 percent as only 458,000 sacks could be shipped.

“Output in the first seven months of 2011 decreased to 4.6 million bags, from 4.8 million in the same period last year.” Reuters reported.

Meanwhile on Friday, a Bloomberg report informed that Colombia has trimmed its production forecast for the year by about 5.6 percent to 9 million bags. The report cited Colombia's National Coffee Growers Federation Chief Executive Officer Luis Munoz.

In fact, Colombia experienced a decline in Coffee harvests in 2009 and 2010 as bad weather and tree renovation programs kicked in.

Uganda coffee export figures revised up

Now some mixed bag from Uganda:

The country, dilly dallying with statistics, has revised upwards its coffee export forecast for 2010-11 to 2.8 million 60 kg bags from 2.67 million bags in April, taking cues from good harvests.

Reuters said, “Exports of the beans rose in July compared with the same month last year after good harvests in the southwestern part of the country”. The August 5 report cited the state-run Uganda Coffee Development Authority (UCDA).

Meanwhile, on Friday, Ugandan Shilling hit an 18- year low vs Dollar.

“The currency of Africa’s second-biggest coffee producer has fallen 17 percent against the dollar this year, making it the world’s worst-performing currency. A surge in food and fuel prices pushed inflation to a more than 18-year high of 18.7 percent in July from 15.7 percent in June.” Said a Bloomberg report. (The Ugandan Shilling dipped 4.5% for the past week alone.)

Uganda is East Africa’s third biggest economy. Dollar inflows are tight even as there exists significant demand for dollar in Uganda’s market as multinational companies and importers seek dollar.

The Central Bank of Uganda is being blamed for its inability to sell dollar frequently in the market.

Nestle’s foray into Vietnamese coffee space

Thin stocks and high-prices have brought Vietnamese coffee exports to a halt: the world’s second largest producer after Brazil. As a result, its shipments in calendar 2011 can drop by more than 5%, a Tuesday report said.

“Exports are estimated to reach 1.15 million tons, or 19.17 million bags, in calendar 2011, down 5.43 percent from last year, the Vietnam Coffee and Cocoa Association (Vicofa) said after a meeting last Friday to review export activities.” reported Reuters. The figure is tad below the forecast of 1.2 mn tons (20 million bags) as tabulated by the Agriculture Ministry.

Meanwhile, Nestle, the world’s biggest food company has announced it would invest $270mn in a factory in southern Vietnam aimed at addressing domestic and foreign consumption needs. (Vietnam is the planet’s top robusta coffee producing nation). Nestle intends to source around 30,000 tons of coffee a year over the next five years.

Nestle has been buying around 20-25% of coffee exports of Vietnam on an annual basis. Going by this figure, the company may buy at least 230,000 tons this year from Vietnam.

Honduras to become Central America’s biggest coffee producer

As farmers, encouraged by high prices of coffee go on a planting binge, Honduras will become Central America's biggest coffee producer next year, surpassing neighboring Guatemala and that too with record exports.

The national coffee institute of Honduras IHCAFE has “revised its forecast for exports during the 2011/12 harvesting season -- which begins in November -- by 12 percent to 4.6 million 60-kg bags” a Reuters report said on Wednesday.

In June, the forecasts put exports at 4.1mn bags

As published in: http://www.commodityonline.com/news/Plantation-Overview-Coffee--Brazilian-frost-damage-adjudged-minimal-41650-3-1.html