Ideas of Brazilian robusta production are being slashed,
thanks to continued dry weather in the country's main growing region for the
Coffee trader Terra Forte trimmed its ideas of the Brazilian
robusta crop by 2.4m bags, to 10.4m bags, citing dry conditions in Espirito
Santo, Brazil's top robusta growing state.
This would be a reduction of some 22% year on year.
And Terra Forte said the "situation remains as bad as it
could be in Espirito Santo, reinforcing our view that the 2017-18 crop will be
severely affected once again"
IBGC cuts prospects
This week the Brazilian statistics agency forecast coffee
production in Espirto Santo at a 12-year low 5.28m bags, down 16% from its
estimate last month.
Brazil's total coffee output was seen at 48.8m bags, compared
to 49.6m bags forecast last month.
In May, the US Department of Agriculture saw robusta production
at 12.1m tonnes, down 9% year on year, noting "above-average temperatures and
prolonged dry spells in Espirito Santo".
Spread remains wide
Robusta coffee, which is cheaper than arabica, is blended
into coffee in order to keep costs down.
Tight robusta supplies in Brazil will also impact arabica
exports, as it will lead to supplies of the latter being diverted into the
domestic market in order to make up for shortfalls of the former.
But as arabica prices rally, the spread between robusta and
arabica has widened to above 60 cents a pound, the highest level since March
This will incentivise roasters and blenders to keep up
robusta purchases, despite the rise in prices.
September robusta futures in London were up 0.3%, at $1,822
a tonne, in afternoon deals.
This is below the highs of earlier this month, but it is
otherwise the highest since June 2015.