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Tuesday, November 28, 2006

Brazil Coffee Scarcity Looms

Again from Bloomberg:

October rains came too late for trees in Brazil's prime coffee-growing region to recover from the driest winter in two decades. Few of the plants have flowered properly, meaning next season's harvest will be meager.

Forecasters say output in the world's largest coffee- producing nation will fall to a four-year low. That has pushed up futures prices by 10 percent in the past month to $1.2265 a pound on the New York Board of Trade. Prices may rise to as much as $1.35 a pound in coming months as farmers like Oliveira hold back supplies.

From May to September, Guaxupe received only 80.6 millimeters (3.2 inches) of rain, compared with 250 millimeters a year earlier, according to Cooxupe's Web site. The rainfall was the lowest since 1985.

Given the forecast drop in production, Cooxupe is advising farmers to sell the minimum from this year's harvest, says Mario Ferraz de Araujo, another of the cooperative's agronomists.

``We try to show them how to manage the sales to avoid financial difficulties later,'' says Araujo, 43. ``The farmers have become more aware of the advantage of selling at the right time.''

Global warming may lead to recurrent droughts, reducing world supplies of Arabica, says Jose Francisco Pereira, general director at Fazenda Monte Alegre, Brazil's third-largest coffee farm. That would lead roasters to increase Robusta coffee, which is more resistant to heat and drought, in their blends, Pereira says. The biggest producer of Robusta coffee is Vietnam, followed by Brazil and Indonesia.

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