Brazilian Coffee Farmers Hesitant to Sell – CoffeeTalk

Coffee traders are optimistic that Brazil’s anticipated record coffee harvest of 75.3 million bags will alleviate the global supply shortage. However, farmers are hesitant to sell their beans, which continues to tighten supply in consuming countries. As of June 11, only 20% of the expected arabica beans had been sold, significantly lower than the typical 30% to 40%. Similar trends are noted in robusta sales, where only 10% have been sold compared to historical averages.

Currently, US and European exchange inventories are at their lowest since March 2024, creating volatility in the futures market. The July arabica contract traded at a premium of approximately 10 cents per pound over September, indicating nearby supply constraints. Despite having profited from previous market rallies, arabica futures, which had peaked above $4 a pound last year, have since dropped around 40%, providing limited incentive for farmers to sell.

Simão Pedro de Lima of the Expocacer cooperative emphasizes that farmers are under no pressure to sell. Moreover, adverse weather patterns, such as the El Niño phenomenon, may impact rainfall crucial for coffee production, heightening market concerns. This situation is compounded by the recent disruptive rains in Brazil’s arabica belt.

Analysts, including Carlos Mera from Rabobank, predict that the July and September contracts will see substantial volatility as farmers’ reluctance to sell delays expected market flows, not only in Brazil but also in Vietnam and Indonesia. They caution that while coffee is available, shipping may take longer, and the record harvest may eventually exert downward pressure on prices. Nonetheless, there are no immediate causes for alarm in the coffee market.

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