Lower production should support prices in 2007

Brazil should harvest between 31.1 and 32.3 million bags of arabica coffee in the next crop (2007/08), which starts in April of 2007 - according to Conab (National Company for Food Supply). The volume is from 23.9 to 26.9 percent inferior to the current crop.

For robusta coffee, on the other hand, the crop production should be higher than the current one. The Espirito Santo state, the main producer of this variety, should harvest between 8.9 and 9.1 million bags, increase from 3.3 to 3.9 percent over the previous crop.

The lower coffee crop production should support arabica prices in 2007, especially at the beginning of the year, when Brazil will be in the off-season period. In this context, a great deal of growers is waiting for higher prices to trade. For robusta, in turn, the larger production of Vietnam during this season and the little increase of Brazilian production in the next crop should pressure down values of this variety.

During the last days, Brazilian coffee market moved at a slow pace, due to the end of the year. Players are betting on higher values from January on. On December 27th, the CEPEA/ESALQ Index for arabica (type 6, delivered in São Paulo) averaged 136.75 dollars per bag of 60 kilos, almost stable over Dec 20th. For robusta (type 6, in the origin Espírito Santo state), prices upped 1.75 in the same period, at 103.20 dollars per bag.

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