Robusta coffee prices top arabica values in Brazil, for first time

24.10.2016

Robusta coffee has, for the first time, become more expensive in Brazil than arabica coffee, as weak rainfall levels provoke fears that the country will in 2017 suffer a third successive drought-damaged harvest.

Robusta coffee prices in Espirito Santo, Brazil's top producing state for the variety, rose 1.2% on Thursday to hit R$518.58 a bag, according to research institute Cepea.

Besides being a record high robusta price, on data going back to 2001, the increase also took robusta prices above those of arabica beans in Brazil for the first time.

Arabica prices as measured by Cepea's headline price, measured as delivered in Sao Paulo city, fell by 1.0% on Thursday to R$507.50 a bag.

Arabica coffee – generally considered of higher quality, and which forms the basis of more expensive roaster offerings – typically enjoys a strong premium which averaged nearly R$130 a bag in Brazil last year, on Agrimoney.com calculations, equivalent to about 30%.

'Worsening conditions'

Robusta prices, which as measured by Cepea are up 37% this year, have been boosted of late by further concerns over the prolonged dryness in Espirito Santo, which threatens to leave the state in 2017 reporting a third successive drought-depleted harvest.

"The weighted rainfall in Brazil's robusta areas has been below average since January," said Rabobank, flagging "worsening conditions" for the crop.

"Most importantly, in the first 18 days of October, when rainfall normally starts to pick up, it rained only 65% of the normal levels."

Brazilian broker Cazarini Trading said that "right now it seems there is only one price" for all coffee varieties, adding that roasters, often reliant on both robusta and arabica beans for their blends, were finding it tough to secure supplies.

Quitting coffee

Earlier this week, Cepea said that some farmers in Rondonia, Brazil's second-ranked robusta producing state, had become so disillusioned with the crop, given successive droughts, that they might grub plantations for sowing with more dryness-resistant crops.

The institute pegged the 2016 Rondonia harvest at well below the 1.7m bags estimated by Brazil's official farm bureau, Conab, saying it would "not exceed 1m bags".

However, with robusta beans more readily available on the world market from other origins, notably Vietnam, the variety remains on futures markets at a notable discount, of nearly 60 cents a pound, to arabica coffee.

"Vietnam keeps supplying the world market for the time being, with record September exports," Rabobank said.


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