Brazil Buys Coffee to Shore Up Prices

Brazil Buys Coffee to Shore Up Prices

By: www.BuyOrganicCoffee.org

http://www.buyorganiccoffee.org/

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

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.















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.















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

http://buyorganiccoffee.org/799/leaf-rust-kills-organic-coffee-crops/

http://buyorganiccoffee.org/869/colombian-leaf-rust-resistant-coffee/
















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.















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.















Here is a snapshot of coffee futures at the beginning of

August, 2013.















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















The general consensus is that the price for September delivery is

staying above $1 a pound because Brazil buys coffee to shore up

price.















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.















Exchange Rates and Coffee Sales















Coffee is priced on the world market in US dollars. People in Brazil buy things with the local

currency, the Real.















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.















Date Real How Many Dollars8/11 1 0.64 8/12 1 0.49 8/13 1 0.43















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.















While coffee priced in dollars is just over a third its value of three years ago coffee priced in Reals is

down forty percent.















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

http://buyorganiccoffee.org/440/wholesale-coffee/














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especially healthy organic coffee follow our articles on

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News & Politics

Brazil Buys Coffee to Shore Up Prices