24/06 17:02 DJ Brazil's Arabica Coffee Trade Soars As Prices Explode

Brazil's coffee producers are rushing to sell their
beans on Thursday as local and international prices exploded.
Nearby July coffee settled 8.15 cents, or 5%, higher at $1.6675 cents a pound
on ICE Futures U.S. Coffee futures settled at their highest levels in more than
12 years as funds bought on technical momentum.
Buying from speculators, like banks and hedge funds, has rallied coffee
prices around 20% in the last three weeks. Although the market slowed as the
market consolidated last week, Thursday's move is a follow-through on the
bullish trend.
Producers in Brazil--the world's top coffee exporter--are "rejoicing," John
Wolthers, a trader at coffee exporter Comexim in Santos, told Dow Jones
Newswires. They see great coffee prices on Thursday and are keen to sell, he
said.
Wolthers said that a good arabica coffee on Thursday was trading at 320
Brazilian reals ($179) per 60-kilogram bag. This compared to BRL310 per bag on
Wednesday and BRL270-BRL275 per bag a month ago.
This is arabica coffee, the country's main export coffee, from the new
2010-11 crop that is steadily coming from the harvest, but not as fast as
buyers would like, he said.
But Wolthers added that the situation is extremely complex for buyers who
have mixed strategies. While some need to buy to meet immediate shipments,
others see financial constraints due to margin calls. Moreover, many buyers
expect prices to fall ahead of the higher output from Brazil's biennial cycle
of alternating high and low production, he said.
Many buyers are waiting for the bulk of the arabica crop to arrive in July
and August, Wolthers said.
For high quality washed coffees, trade was being done at BRL380 per bag this
week against BRL360 per bag on Wednesday compared to BRL320 per bag a month
ago, said Harris Kaas, a trader at Comexim.
Trade for washed coffee has often seen dramatic peaks when buyers were
desperate for this coffee, Kaas said.
Fernando Mellao Martini, a broker from Mellao Martini Negocios em Cafe, said
for scarce semi-washed coffees, prices have also rocketed. "Producers are
getting crazy prices".
Producers can get BRL360 per bag this week for semi-washed coffees against
BRL345-BRL350 per bag on Wednesday and BRL310 per bag a month ago, Martini
said.
There is strong demand for washed and semi-washed coffees with origins such
as Colombia and Central America seeing tight supplies of such mild coffees.
Moreover, Brazil suffered quality problems with last year's crop suffering
from rain. Meanwhile, new beans still aren't arriving fast enough from the
harvest to quench buyers' thirst.
Some producers that have already sold large amounts of their beans, are
already making forward coffee sales for 2011 due to the good prices, Martini
said.