brazil buys coffee to shore up prices
TRANSCRIPT
Coffee prices Friday bounced off four-year lows on expectations
Brazil, the world's biggest grower, is preparing to buy beans. Coffee prices are at a ten year low due to
high stockpiles.
.By: http://buyorganiccoffee.org/887/brazil-buys-coffee-to-shore-up-prices
In a move similar to the US agricultural policy of providing
price supports, Brazil buys coffee to shore up prices. The coffee will be stored and, for now, effectively
taken off the market.
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A couple of years ago prices of Arabica coffee were up. El Niño
ravaged the coffee growing regions of Brazil and Colombia greatly
reducing harvests.
.By: http://buyorganiccoffee.org/887/brazil-buys-coffee-to-shore-up-prices
Coffee leaf rust was devastating plantations from Central America
down to Colombia. This year Brazil expects to see a harvest surpassing
last year’s record. Colombia has gotten a handle on the leaf rust
issue and prices for Arabica coffee are falling in response to
oversupply..By: http://buyorganiccoffee.org/887/brazil-buys-coffee-to-shore-up-prices
A government response appears as Brazil buys coffee to shore up
prices. They have done this before; buying directly from growers to reduce market supply and as a
result holding prices up.
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Arabica coffee as wholesale coffee is selling for only a third of its price
from two years ago and just this year prices are down by a fifth.
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Here is a snapshot of coffee futures at the beginning of
August, 2013.
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NYMEX Coffee Futures as of August 3, 2013
Delivery Date and US Dollars per Pound of Green Coffee
Sep-13 1.1825 Dec-13 1.2105Mar-14 1.238 May-14 1.2565
Jul-14 1.2765 Sep-14 1.295Dec-14 1.316 Mar-15 1.337May-15 1.3525 Jul-15 1.3675
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The general consensus is that the price for September delivery is
staying above $1 a pound because Brazil buys coffee to shore up
price.
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As the table shows the expected price for later delivery goes up as stocks are expected to diminish
and Brazil will not necessarily have another record harvest next year.
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Exchange Rates and Coffee Sales
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Coffee is priced on the world market in US dollars. People in Brazil buy things with the local
currency, the Real.
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After a strong run the Real has been losing ground against the
USA dollar for the last two years. Here is a snapshot of the
relationship of the Brazilian Real to the US Dollar over the last two
years.
.By: http://buyorganiccoffee.org/887/brazil-buys-coffee-to-shore-up-prices
Date Real How Many Dollars8/11 1 0.64 8/12 1 0.49 8/13 1 0.43
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In early 2011 coffee futures went for $3 a pound which as just under five
Reals. Today coffee futures are about $1.20 a pound which is just
under three Reals.
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While coffee priced in dollars is just over a third its value of three years ago coffee priced in Reals is
down forty percent.
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As Brazil buys coffee to shore up prices, some Brazilian farmers are
selling their wholesale coffeeanyway at current prices because they need money and the strong dollar gives them a better return
for the current international coffee price than they would get with a
weaker dollar..By: http://buyorganiccoffee.org/887/brazil-buys-coffee-to-shore-up-prices
For more insights and useful information about coffee and
especially healthy organic coffee follow our articles on
http://www.BuyOrganicCoffee.org.
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