Brazil Coffee Output to Rise 15% to Record in 2014, Ecom Affirms

Bloomberg News (BN) Date: Jan 7 2014  15:54:17

Marvin G. Perez

     Jan. 7 (Bloomberg) -- Ecom Agroindustrial Corp., one of the

world’s biggest coffee traders, affirmed that output in Brazil,

the top grower, will rise at least 15 percent to a record this

year, topping a forecast by Volcafe Ltd.

     In the season that starts April 1, the harvest will be at

least 60 million bags amid favorable weather, Jorge Esteve

Jorge, the vice president at Empresa Interagricola, a unit of

Pully, Switzerland-based Ecom, said today in a telephone

interview. Last year, Ecom estimated output approaching 52

million bags, each weighing 60 kilograms or 132 pounds. This

season marks the higher-yielding half of a biennial cycle.

     “Things are still running very smoothly for the harvest,

with good rains and sunshine” for crop development, Esteve said

from Santos, Brazil. Areas that were hurt last year by dryness

during flowering, including Bahia and Rondonia states, are

improving, he said, affirming a November estimate.

     Yesterday, Volcafe, the coffee-trading unit of ED&F Man

Holdings Ltd., said output will be 51 million bags this year,

down 11 percent from its estimate of 57.2 million in 2013. The

reduction, mostly in the arabica variety, was attributed to tree

exhaustion and hard pruning by farmers, the Winterthur,

Switzerland-based company said.

     Brazil’s government estimated output last year at 49.2

million.

     Yesterday, arabica-coffee futures in New York posted the

the largest three-day rally in 15 months, partly on the Volcafe

report. Citigroup Inc. cut its output estimate as much as 10

percent to 52.6 million bags.

     Coffee futures tumbled 23 percent last year, the third

annual decline and the longest slide since 1993, as global

harvests are set to outstrip demand for the fourth straight

season, U.S. Department of Agriculture data show.

     Money managers and other large speculators have bet on

lower prices since July 2012, U.S. government data show.

     Ecom trades about 11 million bags of coffee a year, Esteve

said.

Robusta coffee prices - will they outpace arabica in 2014?

Robusta coffee prices fell in 2013 by 14.3% on London's Liffe futures market.

But that was far better than the 23% drop in the, more expensive, New York-listed arabica beans, which were weighed by a strong Brazilian harvest, and a revival in Colombian output, as trees replanted during an anti-rust campaign matured.

Robusta has also gained demand momentum from a switch to the bean as its discount to arabica approached 200 cents a pound in 2010-11.

But now that gap has collapsed, will that demand switch reverse? And how will the robusta market deal with its own supply spurt, with the harvest in top-producer Vietnam seen hitting a record?

Commerzbank

"Since summer, robusta prices have moved in a similarly negative fashion as arabica prices after far outperforming them for a very long period.

"Nonetheless, arabica prices remain low relative to robusta prices when compared to their history. this should lead to a substitution of arabica for robusta in coffee consumption.

"The recent recovery of robusta prices was largely due to the fact that Vietnam's latest export numbers came in low despite what seems to have been a record-high harvest. The policy of holding back is apparently paying off, at least in the short run.

"We doubt robusta prices will be able to escape the pressure of a plenteous coffee supply in 2014 and don't expect its price to recover until the second half of the year – to a level of $1,600 per tonne."

Macquarie

"While we may revise lower our Brazilian 2014-15 on-crop outlook in light of new crop data due January, as well as arabica demand figures based on the recent robusta -to-arabica demand switching, we still think arabica prices will collapse from today's levels.

"But it will take a concerted plunge in robusta futures to trigger this first.

"We expect a sharp robusta prices sell off. The robusta fundamentals are less bullish this year, but the temporary dislocation of stocks is supporting the market.

"In our view, it is just a matter of time before supplies reach the necessary homes. Hedge pressure is beginning to come through now. And we expect the inverted Liffe robusta forward curve to eventually attract more grading for certification."

Phillip Futures

"The premium of arabica coffee to robusta coffee fell to multi-year lows [in 2013], hovering below 40 cents a pound.

"We refer back to 2011 when the premium of arabica coffee to robusta coffee surged to highs, causing roasters to switch from arabica coffee beans to robusta coffee beans instead.

"With the current situation of a low premium of arabica coffee to robusta coffee, we might witness roasters switching back to arabica coffee from robusta coffee, especially if prices of arabica coffee may be further weighed by oversupply. "

PRODUÇÃO BRASILEIRA SERÁ DE PELO MENOS 60 MILHÕES DE SACAS EM 2014 disse Jorge Esteve Jorge da ECOM

A Ecom Agroindustrial Corp, uma das maiores tradings de  café do mundo, sediada na Suíça, afirmou que a produção no Brasil vai  crescer pelo menos 15% em 2014, atingindo um nível recorde. Na temporada que

começa em abril, a produção somará "pelo menos 60 milhões de sacas, por  conta de condições climáticas favoráveis", disse Jorge Esteve Jorge,  vice-presidente da Interagricola, uma unidade da Ecom com base em Santos, no  litoral paulista .

No ano passado, a produção brasileira foi de cerca de 52  milhões de sacas, afirmou. A cultura do café arábica no Brasil alterna anos  de alta e de baixa produtividade. 2014, no caso, é ano de ciclo alto.

"As coisas ainda estão indo muito bem para a safra, com boas chuvas e sol para o desenvolvimento dos frutos", disse Jorge. "Áreas que foram  atingidas no ano passado por estiagem durante a floração estão melhorando".

Ontem, Volcafe, a unidade de café de comércio da ED & F Man Holdings Ltd., disse que a produção de 2014/15 será de 51 milhões de sacas, 11% abaixo de  sua estimativa de 2013/14, que apontava uma produção de 57,2 milhões. A  redução, principalmente na variedade arábica, foi atribuída à exaustão  produtiva após dois anos consecutivos de grandes volumes e um grande número de podas de árvores realizado por cafeicultores.

A ED & F Man Holdings Ltd divulgou em novembro que a safra de 2014/15 do Brasil seria de 60 milhões de sacas conforme seu “COFFEE SUPPLY AND DEMAND QUARTERLY REPORT  NOVEMBER 2013”(relatório anexo)

A Ecom Agroindustrial Corp. comercializa cerca de 11 milhões de sacas de café por ano.