Estimate of lower stocks does not avoid drops yet

Brazilian coffee growers kept retreated in most part of April, waiting for a better moment to trade. However, this behavior has not been supporting prices. The CEPEA/ESALQ Index for arabica type 6, delivered in Sao Paulo (capital) closed at 226.84 reals or 111.42 dollars per bag of 60 kilos on Monday, Apr 30th, decreasing 7.2 percent in Real and 6.1 percent in dollar from the beginning of the month to Apr 30th.

For robusta type 6, in the origin Espírito Santo state, there is a larger volume of the grain from the 2007/08 crop. The Index for that variety averaged 185.48 reals or 91.10 dollars per bag on Apr 30th, down 8 percent in Real and 6.7 percent in dollar during the month.

This month, the Brazilian government will liberate resources to growers for the 2007/08 crop - it was approved 2.026 billion of reals. In this context, sellers should limit even more the supply. The production this year plus Brazilian stocks should be lower than the demand - domestic and international -, supporting prices in the second semester, especially in August and September.


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