Brazil Coffee Trade Sees Uptick As Prices Climb

SAO PAULO, Jul 22, 2010 (Dow Jones Commodities News via Comtex) -- Brazil's coffee trade saw an uptick on Thursday as international and local bean prices climbed.

Nearby September coffee on ICE Futures U.S. jumped 4.40 cents, or 2.8%, to settle at $1.6170 a pound on Thursday on speculative fund buying linked to bullish chart factors and a widespread commodity rally.

This upswing followed days of world prices plunging downward, to five-week lows on Wednesday.

"Trade in Brazil only picked up as prices rallied late on Thursday," Harris Haase, a trader at coffee exporter Comexim in Santos, told Dow Jones Newswires.

Buying and selling in Brazil, the world's largest coffee producer, has been slow this week as international and local coffee prices fell, Haase said.

Haase said a good arabica coffee, type six, in southern Minas Gerais state, the No. 1 coffee-growing region, on Thursday was trading at between 300 Brazilian real ($170) and BRL310 per 60-kilogram bag. This compared to BRL300 per bag earlier in the week and BRL320-BRL330 per bag a week ago.

Trade remained light, however, as buyers and sellers in Brazil remain cautious due to a raft of conflicting indicators. Favorable weather in Brazil for its cyclically large coffee crop potentially should trim prices.

Continuing concerns about Central America and Colombia's crop size and the razor-tight supply of fine mild coffees should elevate prices. External factors such as economic uncertainty also further cloud the picture.

Gil Carlos Barabach, a coffee analyst at Safras, said trade remains light this week. Trade was done on Thursday at around BRL305 per bag, after the ICE market hit lows on Wednesday, he said.

Trade for scarce fine washed coffees was being done at BRL360 per bag on Thursday, Barabach said. But the supply remains tight.

Brazil's farmers have harvested more than 50% of the arabica beans and as a result they are well capitalized. "They can afford to wait and see if prices improve," he said.

A trader at Swiss Coffee House in Minas Gerais state said a good Swedish arabica coffee saw buyers hunting for differentials of 26-28 points under the December coffee contract on ICE. Sellers wanted 21-22 points under the same contract, with little trade being done, he said.

The Brazil coffee harvest began in May and will run through September.

Brazil is the second-largest coffee-consuming country, behind the U.S.