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Brazil robusta exports grow as price gap to Vietnam remains high: analyst

Brazil robusta exports grow as price gap to Vietnam remains high: analyst

Tuesday, August 08, 2023, 09:42 GMT+7
Brazil robusta exports grow as price gap to Vietnam remains high: analyst
Photo: Reuters

NEW YORK -- Brazil robusta coffee export deals are growing quickly as coffee traders take advantage of the South American country's significant discount to Vietnam and Indonesia, according to an analyst.

In a weekly note for Brazilian risk advisory firm Archer Consulting, coffee analyst Marcelo Fraga Moreira said that international traders that sold robusta coffee to European processors in contracts that include "option for origin" are shifting from sourcing that coffee in Asia toward getting it in Brazil.

Moreira said that while Vietnam robustas are currently quoted at a premium of around $350 per metric ton over London futures LRCc1, Brazilian robustas are priced at $270 per ton over futures.

The analyst believes that at current selling pace, Brazil could export as much as six million bags of robusta beans in the season.

A trader at an international house operating in Brazil, who asked not to be named, said that the number of deals for Brazilian robustas increased "exponentially" in recent weeks.

According to him, some large coffee trading houses that sold Vietnam beans forward are negotiating with their clients, mostly European roasters, to provide Brazilian robustas instead, trying to reduce their potential losses since prices for robusta from Asia skyrocketed.

"Roasters are not going to accept Brazil in place of Vietnam easily. They will demand discounts," the trader said.

Sometimes there is already a discount defined in a contract that includes "option of origin", Moreira said.

He believes that over time that window of opportunity for Brazilian robustas, regarding prices, will close as the market adjusts.

Brazil is usually the No.1 exporter of milder arabica coffee beans, and it has increased production of robusta - a type widely used to make instant coffee - in recent years.

Reuters

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