June 15th, 2012

Coffee Futures – Buyers of fine coffee from Brazil, the world’s largest producer, are getting a smaller discount as rains delay harvesting and threaten quality.

Fine cup beans for July and August shipment were at a discount of 11 cents a pound to the price on the ICE Futures U.S. exchange in New York, according to Rio de Janeiro-based broker Flavour Coffee. That compares with a discount of 12 cents last week, data from the broker show.

Above-average rains in May and at the beginning of this month have delayed the start of the arabica beans harvest. About 10 percent of the beans have been picked in southern Minas Gerais, the biggest growing state for the arabica variety, and 20 percent in Zona da Mata, Flavour Coffee said in a weekly report e-mailed yesterday.

The discount for fine cup beans “narrowed this week especially for July and August shipments,” the broker said. Arabica coffee from the new season won’t be ready for sale before July, as the beans still need to be cleaned and dried, according to the report.

More rain is forecast to reach coffee areas next week after dry weather in recent days, Flavour Coffee said. Above-average temperatures have accelerated the maturation of cherries that contain the beans, according to the broker.

“Some cherries are even over-mature, which may cause some cup quality damage if rains fall before it has been picked,” the broker said.

Coffee: Good Cup

Buyers of good cup quality beans are getting a discount of 18 cents a pound to the exchange price for July and August shipment, up from 15 cents a pound last week, according to the report. Fine cup beans are usually more expensive than good cup ones because of their taste profile.

Conillons, as Brazilian robusta coffee is known, was trading at a premium of 3 cents a pound ($66 a metric ton) to the price on the NYSE Liffe exchange in London, unchanged from last week, Flavour Coffee data showed.

“The present market behavior continues to surprise traders who expected some selling pressure at this point of the harvest,” the broker said. “Offers continue with premiums over Liffe attracting no buyers at all.”

Coffee futures robusta for September delivery rose 0.6 percent to $2,116 a ton by 10:14 a.m. in London. Arabica coffee for September delivery was up 1.2 percent at $1.528 a pound in New York.

- Isis Almeida in London at Bloomberg.