Exchange rate supports domestic values

Even with the decreasing international prices, the limited supply and, especially, the dollar appreciation against the Real supported Brazilian coffee values in the first fortnight of September. On Monday, September 15th, the CEPEA/ESALQ Index for the arabica type 6, delivered in Sao Paulo (capital), closed at 262.25 reals or 144.57 dollars per bag of 60 kilos, up 1.55 percent in Real from August 29th. The dollar valuated 11.08 percent in the same period, averaging 1.814 real on Monday. In general terms, trades remain moving slowly. Growers prefer waiting for the Pepro's auctions to trade the product at superior values.

For the robusta type 6, in the origin Espírito Santo state, the Index upped 1.96 percent in Real during the first fortnight, at 219.53 reals or 121.02 dollars per bag on Sept 15th. In Rondônia, second main producer state of robusta, roughly 80 percent of 2008/09 crop production for this variety was already traded.

The third forecast for the 2008/09 Brazilian coffee crop, published by Conab (Brazilian government agency) on Monday, Sept 8th, confirmed what agents were predicting. Now, the production should amount to 45.85 million bags of 60 kilos (arabica and robusta), a slight increase compared to the previous May estimate of 45.5 million bags and a raise of 27.1 percent over the previous crop. It is important to remember that the volume of grains with higher size has reduced in this crop.

For the next season (2009/10), agents are concerned about the harvest delay of the current crop. If activities last until October, some flowers from the next season should drop from the trees, reducing even more the production in a year of low supply due to the biennial cycle of the coffee. (Cepea - Brazil)

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