Low stocks should remain the upward trend

Even with the positive biannual cycle, the Brazilian coffee production will not reach a record in 2008. The drought between August and October last year delayed the blooming period, which started only at the beginning of November. The lack of rain also damaged some flowers in regions like Sul de Minas, the biggest coffee producer region in Brazil.

The first Conab and IBGE (official data) forecast published on Jan 8th showed a Brazilian coffee production from 41.2 and 44.1 million bags of 60 kilos, below to the volume expected by market agents.

Based on current information, for one more year, the Brazilian volume available will be too low to supply the international and domestic demands and, as a result, prices should keep firm. The Brazilian Association of the Coffee Industry (Abic) forecasts the national consumption at 18.1 million bags this year, higher over 2007 (17.1 million bags). Regarding exports, the volume should total 28 million bags. So, the Brazilian production should amount to, at least, 46 million bags. The difference will come from stocks, which are also restricted. In the second fortnight of December/07, public inventories were at around 700 thousand bags. This volume has been destined to the domestic market through auctions.

Regarding the robusta, growers are very satisfied with the crop development, which was helped by the weather, especially in the Espírito Santo state, main producer state of this variety. On the other hand, in Rondônia, the hot and dry weather in August and September should have reduced the production in until 20 percent.

During the first fortnight of January, the CEPEA/ESALQ Index for arabica type 6, delivered in Sao Paulo (capital) moved up 3 percent in Real, averaging 269.31 reals or 153.89 dollars per bag of 60 kilos on Jan 15th. For robusta type 6, in the origin Espirito Santo state, the Index increased 1.7 percent in Real, at 210.44 reals or 120.25 dollars per bag. Trades for this variety should increase during the harvest peak period (May/June).

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