Cepea underlined how Brazil's unusual weather is affecting
arabica coffee prospects far more than robusta plantations, even as US giant JM
Smucker acknowledged the impact of higher bean costs.
For Brazilian robusta growers, who have already finished their
2014 harvest, the flowering observed this month is "as expected" on timing
terms, and is proving promising in its extent, said Cepea, the research centre linked
to Sao Paulo University.
Indeed, the first blossoming seen in the robusta-growing
areas of Espirito Santo and Rondonia has proven "good", industry sources told
the institute, adding that second flowering is imminent.
However, for arabica plantations, the first flowering over
the past month, which is usually not observed until "late August and early
September", is less than ideal.
'Some flowers pulled
The early arabica tree blossoming - "a result of an extended
period of [drought] stress, followed by rains in late July", earlier than usual
in Brazil's coffee belt - comes with a greater risk of flowers aborting, if follow-up
rains are not forthcoming.
It has also in some areas coincided with the latter stages
of the arabica harvest, meaning some losses in the process.
Sources told Cepea that in "the same plant that blossoming
was observed, some coffee berries are still left to be harvested.
"As a result, in crops that are harvested by machines, some
flowers were also pulled out."
Cepea said that it was still too early to rule out crops
from further blossoming, although added that "it is important to highlight that
the dry weather observed at the beginning of 2014 could have reduced the
productive potential of coffee crops for 2015-16".
Coffee beans in any harvest are borne on vegetation grown
the year before.
Cepea highlighted that prices of benchmark type 6 arabica beans
in Sao Paulo had risen by 2.3% so far this month, to R$441.83 ($191.15) per bag.
The price of type 6 robusta beans had fallen by 2.3% to R$246.21
($108.75) per bag.
This year's drought too has affected more output in arabica areas than robusta ones, which have been less badly affected by dryness and are more likely to have irrigation, Agrimoney.com has been told.
'Higher coffee costs'
The comments came as JM Smucker, the biggest coffee roaster,
acknowledged that buoyant bean prices, lifted by Brazil's production woes, had
reduced its cashflow in the May-to-July period.
"This decline is primarily attributable to a greater current
year use of cash for working capital needs reflecting higher green coffee costs
and ending inventory," Mark Belgya, the group's finance director, told investors.
The group has raised the prices of its products to offset higher
costs, although the uplift came too late to prevent sales in the Smucker coffee
division falling 2.3% to $502.7m in the latest quarter.
"While we announced a 9% list price increase on the majority
of our portfolio in June, pricing on committed promotional programs, along with
continued price investment to remain competitive on shelf, temporarily delayed
the impact," chief operating officer Vince Byrd said.
"We expect full reflection of the price increase in the
second [August-to-October] quarter."