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Robusta woes limit hopes for rebuild in Brazil coffee stocks

Brazil's coffee stocks, on course for a four-year low, may not stage a recovery next season, Cepea said, flagging "poor" results from the robusta bean harvest.

Brazilian coffee inventories at the close of 2015-16, in June, "will be the smallest since 2011-12", the institute said, noting the prospect of demand ahead of last year's harvest.

Domestic consumption, estimated by 20.5m bags a year by industry group Abic, plus exports, which have reached 30.4m bags for the first 10 months of the season, have already exceeded last year's production, pegged at 49.4m bags by the US Department of Agriculture.

Indeed, the pace of exports is running only 2% behind the high achieved last season, when shipments ended at 36.5m bags, although Cepea acknowledged that the squeeze on supplies could bring a soft end to 2015-16 for shipments.

"The current low supply for coffee, especially of high-quality beans, may limit shipments towards the end of the season," the institute, attached to Sao Paulo University, said.

Stocks outlook

And Cepea raised doubts over a rebuild in Brazilian coffee inventories next season, despite acknowledging the prospect of a sizeable 2016 arabica harvest, which many commentators have placed above 40m bags.

This increase "however, is not an indication of a recovery in stocks", the institute said, signalling the potential for further strength in Brazilian exports.

"Some other important producing countries should not have a large offer of beans for export."

Vietnam, the largest producer of robusta beans, "has already indicated that it will see a 30% production drop in 2016-17".

Colombia - the second-biggest producer of robusta beans, after Brazil - is "still suffering from the effects of El Nino", and has suffered a dent to its shipments from the "high volume of low-quality coffee".

"Shipments from African countries and Indonesia may also be limited in 2016-17, due to increased domestic demand."

'Quality has been troubling'

Cepea also highlighted concerns over the robusta harvest in Brazil itself, the second-biggest producer of the variety, saying that a hangover from drought in major growing regions had shown up in "poor" harvest results.

The harvest is some 50% complete in Espirito Santo, where it started in April, and 80% finished in Rondonia.

As of mid-May, robusta yields were "up to 25% less than in a normal harvest", Cepea said.

"In addition, the quality has also been troubling [the industry]," the institute said.

Nonetheless arabica coffee prices have performed modestly more strongly of late in Brazil, rising by 3.7% over the last month to R$492.52 a bag, compared with a marginal decline in robusta values, to $389.21 a bag.

The performance took the premium of arabica coffee over robusta back above $100 a bag for the first time in two months.

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