April 27th, 2012

Coffee Futures – Buyers of coffee from Brazil, the world’s largest producer, are getting a bigger discount for beans as the new-crop harvest approaches, brokers said.

Fine cup beans for May and June shipment are trading at a discount of 8 cents a pound to the price on ICE Futures U.S. in New York, data from Rio de Janeiro-based broker Flavour Coffee showed. That compares with a 5-cent discount last week, according to the data.

Buyers of good cup beans for shipment in the same period are getting a discount of 15 cents a pound to the exchange price, up from 12 cents last week, Flavour Coffee said in a report e-mailed yesterday. Fine cup coffee is usually more expensive than good cup quality because of its taste profile.

“Some aggressive differentials could be locked in at good discounts, both for fine and good cup qualities,” Thiago Cazarini, a broker at Varginha, Brazil-based Cazarini Trading Co., said in a report e-mailed yesterday, referring to a discount or a premium to obtain physical coffee in relation to the futures price. “Some new-crop lots appeared in the market.”

Growers in Brazil will harvest a record 49 million to 52.3 million bags of coffee in the 2012-13 season, exceeding the high of 48.5 million bags in 2002, according to a Jan. 10 report from Conab, the government’s crop forecasting agency. The season usually starts in July and growers normally start harvesting the crop at the end of May or beginning of June.

Coffee: Robusta Premium

Conillons, as Brazilian robusta coffee is known, are trading at a premium of 3 cents a pound ($66 a metric ton) to the price on NYSE Liffe in London for May and June shipments, unchanged from last week, Flavour Coffee said.

A “reasonable quantity” of conillons traded this week for shipment as far as July, Flavour Coffee said, without providing a figure for the sales.

“This is quite surprising considering conillons are on harvest, and therefore much more volume can arrive in the domestic market, thus forcing prices down,” the broker said.

Brazil’s coffee exports will be about 2 million bags in April, down from 2.1 million bags last month, Flavour Coffee estimated. Each bag weighs 60 kilograms (132 pounds).

Robusta coffee for July delivery fell 0.1 percent to $2,008 a ton by 10:04 a.m on NYSE Liffe. Arabica coffee for July delivery rose 0.1 percent to $1.7595 a pound on ICE.

- Isis Almeida in London at Bloomberg.