Growers in top exporter will get record funding to store beans
Brazil farmers already sold 34% of their crop before harvest
By Fabiana Batista
Top coffee exporter Brazil may not flood the market as much as some people fear.
While the country is harvesting another bumper crop at a time of soft demand, many of those beans won’t be available for sale in the coming months because growers have sold in advance or will store supplies until prices recover.
A third of the estimated 68 million bags that will be picked this season are already sold after growers took advantage of a plunge in the local currency to lock in prices, according to consulting firm Safras & Mercado. That’s up from 28% at the same time last year and the 24% five-year average.
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In addition, growers are preparing to store as many as 13 million bags, or 19% of the expected crop, with the help of record funds available via state lending program Funcafe. The loans allow farmers to cover expenses rather than immediately selling beans, said Silas Brasileiro, who heads the National Coffee Council. That level of hoarding may also support prices as the harvest intensifies, he said.
Still, the prospect of less Brazilian supply hitting the market may not be enough to spur a recovery. Futures are down 25% this year as the virus constrains consumption at coffee houses and restaurants.
“It is hard to see any bottom for prices in a speculative scenario,” Nelson Salvaterra, a broker at Rio de Janeiro-based Coffee New Selection, said in a text message.
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