Brazil Coffee Farmers Hold Off On Preharvest Sales

Brazil Coffee Farmers Hold Off On Preharvest Sales
DJ Brazil Coffee Farmers Hold Off On Preharvest SalesPaul Kiernan
DOW JONES NEWSWIRES SAO PAULO (Dow Jones) -

Preharvest sales of coffee in top producer Brazil areweak so far as farmers, well-capitalized from last year's soaring prices, holdout for a rebound in the market. Local agriculture research firm Safras & Mercado estimates that only 15% to20% of the upcoming 2012-13 coffee crop has been presold in the mainarabica-growing regions of Minas Gerais and Sao Paulo states. A normal levelwould be between 30% and 35%. "Producers are still snubbing presales," said Gil Barabach, an analyst at thefirm. Coffee futures in New York have fallen to below $1.85 a pound from around$2.90 in September, and Barabach said growers are frustrated that prices havecontinued to decline. At the same time, foreign buyers of Brazilian coffee are hoping for prices tofall even further once farmers start harvesting in June what many expect willbe a record crop, Barabach added. Exports have also taken a hit. According to exporters' association CeCafe,Brazil's shipments of green coffee fell 24% in the first two months of 2012from a year earlier to 3.84 million 60-kilogram bags, the lowest level since2008. Last year's export numbers were unusually strong because of rallying prices,high inventories in Brazil and weak crops in other countries. Coffee output inBrazil follows a biennial cycle of alternating years of higher and lowerproductivity, and 2010 was an on-cycle year. "Since last year we've been a bit worried this would happen," said MarceloMarson, a trader for Minas Gerais green coffee exporter Atlantica Coffee."Producers had been selling at better prices and now they can hold out."