COFFEE NEWS

So Brazilian scientists and agronomists are rushing to deter the effects of climate change on the world’s biggest coffee producer and second-ranking soybean grower, a country crucial to the international food supply.

Experts in tropical agriculture are developing genetically modified coffee, soy beans and other crops that can withstand higher temperatures in Brazil’s expanding northeastern desert, new pests and diseases and more flooding in low-lying areas.

This year, the scientists are preparing the first large-scale plantings to test the productivity of new genetically modified soy crops at a climate-controlled research station in the southern state of Parana.

“Under the current situation, the production of food is threatened,” said Eduardo Assad, a researcher for Brazil’s agricultural research agency Embrapa.

Already, the world economic crisis has thrown Brazilian agricultural commodities into a slump, with grain prices plunging on weak demand. But climate change remains an acute long-term concern: The U.N.’s Intergovernmental Panel on Climate Change predicts an increase in global temperatures of 3.6 to 7.2 degrees in the next 20 years, with even greater temperature increases in the Amazon.

That could mean a 10% reduction Brazil’s arable land for coffee by 2020 — and a one-third reduction by 2070 — as the crop’s suitable climate migrates into the Andean foothills of neighboring Argentina, according to a study Assad directed.

Brazil’s coffee plantations extend across 5.7 million acres and produce more than twice as much as the next-largest grower, Vietnam.

Brazil’s soy crop, the largest outside the USA, would lose an estimated 20% of its cultivatable land by 2020. Beans, corn, sunflower, cotton are among other crops that would suffer a similar retreat due to high temperatures, the Embrapa study found.

“What we are doing in Brazil is adapting, anticipating what is to come,” Assad said. “We’ve been working on this for two years, and we are going to need five or 10 years to be prepared.”

Scientists at Embrapa have been isolating genes from drought-resistant plants and combining them with traditional crops. It’s a difficult process, but researchers have seen some early successes in soy plants that respond favorably to dry, hot conditions while thriving in normal weather as well.

Modified bean and coffee varieties have not yet shown as much success.

Scientists around the world are turning to genetic engineering to bolster food production as supplies are stretched by population growth, drought and climate change. These genetically modified seeds have been controversial — some farmers and environmentalists criticize the role of agricultural corporations, and worry about health consequences. But Brazil’s biosafety commission has already approved modified varieties of corn, soybeans and cotton, and local scientists say their new seeds will be tested for safety.

The climate change panel’s computer models show that even slight warming will reduce crop yields across the tropics. Brazil may be better equipped than most to adapt, since its scientists have spent decades developing fertilizer and soil management, infrastructure and public policies that have transformed arid tropical plains into today’s thriving agricultural zones.

“We should see the real changes in 10 or 20 years” from global warming, said genetic engineering specialist Francisco Aragao. “If we want to do agricultural investigations to combat the effects, you have to start now.”

Enlarge
A young worker uses a hoe to clear the furrows between the coffee trees in the state of Minas Gerais in Brazil. Climate change could cause a 10% reduction Brazil’s arable land for coffee by 2020 and a one-third reduction by 2070.

Source: http://www.usatoday.com/weather/climate/globalwarming/2009-02-19-brazil-coffee-climate-change_N.htm

Demand may exceed output by 8 million 60-kilogram bags in the coming year — almost what Germany consumes — and exporter stockpiles are the lowest since 1965, the International Coffee Organization said. Arabica coffee futures may jump 25 percent this year after falling for the first time since 2001 as output drops in Brazil and Colombia, the Western Hemisphere’s top two growers, Goldman Sachs Group Inc. said Feb. 9.

“We see coffee prices increasing in 2009,” Sandra Bachofer, who helps manage $1.2 billion for Zug, Switzerland- based Tiberius Group, said yesterday in a telephone interview. “We expect coffee to be one of the most promising commodities in 2009.”

Expectations for a rebound show what happens when speculator-driven futures markets collide with real-world supply and demand. The rally would drive up costs for Seattle-based Starbucks and Kraft Foods’s Maxwell House, while enriching growers and increasing export revenue in countries such as Vietnam and Brazil.

While Fortis Bank says the recession may stall demand and keep prices in check, coffee is up 0.9 percent this year at $1.1305 a pound on ICE Futures U.S. Contracts for December delivery indicate the rally will continue.

Price Forecasts

Judith Ganes-Chase, a former Merrill Lynch & Co. analyst who runs a consulting firm in Katonah, New York, said coffee may rise as much as 52 percent to $1.70 by June 30. Morgan Stanley forecast an average of $1.41 in the year starting Oct. 1, and Goldman Sachs predicted $1.40 in the next 12 months.

Starbucks, the world’s largest coffee chain, said Jan. 28 it expects “unfavorable” coffee costs in the year ending Sept. 30 to erode the benefit of lower dairy prices. The company said its cost of first-quarter sales rose 2.9 percentage points from a year earlier, partly because of higher coffee expenses.

“We are confident that we have the coffee we need and that increased premiums in specific countries will have little or no effect on our existing or future contracts,” Stacey Krum, a Starbucks spokeswoman, said in an e-mail.

The company usually has supply commitments for a year to 18 months into the future, so the impact of changing coffee costs may take that long to show up in financial results, said Jeffrey Farmer, an analyst with Jefferies & Co. in Boston, who rates the shares a “hold.”

Maxwell House

Northfield, Illinois-based Kraft, the world’s second-largest food company, raised Maxwell House coffee prices twice in early 2008 as bean costs jumped, followed by three reductions. No price changes were made this year, spokeswoman Bridget MacConnell said.

Higher prices may hurt hedge funds and other large speculators who sold 19,379 futures contracts valued at more than $864 million as of Feb. 10, based on the May delivery contract, in a bet that prices would fall, data from the Commodity Futures Trading Commission show.

Coffee fell 14 percent in the fourth quarter on the ICE exchange even as the premium for Colombian beans over the most- active New York futures jumped 54 percent, reflecting demand at a time when investors fled commodity markets. Open interest, or the number of outstanding contracts, fell almost 10 percent.

“Coffee fell victim to massive fund liquidation” last year, said Roland Veit, chairman of importer Paragon Coffee Trading Co. in White Plains, New York. “The coffee market was driven too low for non-fundamental reasons.” Buyers in the physical market “started to ignore” futures that didn’t reflect supply and demand, he said.

Commodity Rally

Investors stocked up on commodity futures early last year, hoping to profit from rising demand for food, feed and fuel. A weakening dollar made raw materials priced in the currency more appealing for overseas buyers and as an inflation hedge.

The number of outstanding coffee futures in New York reached a record 204,360 contracts on Feb. 15, 2008. At 37,500 pounds per contract, that’s equal to almost half of all the coffee consumed globally last year. The surge in speculator holdings helped push the price to a 10-year high of $1.719 a pound on Feb. 29, 2008.

Then the credit crisis and the recession erased optimism about commodity demand and sparked a rush by investors to sell assets. From October through December, hedge funds and other large speculators were betting coffee prices would drop as the Standard & Poor’s 500 Index posted the biggest quarterly decline since 1987. The Reuters/Jefferies CRB Index of 19 commodities, after reaching a record high July 3, plunged 36 percent last year, the most in more than five decades.

Colombia Premium

By December, coffee reached a two-year low and open interest had fallen 39 percent from its record.

Tighter supplies are pushing up the cost of coffee from Colombia, where a growers group on Jan. 26 reported 2008 production dropped 9 percent to 11.5 million bags. The decline means export shipments “may arrive late” to some buyers, said Jorge Lozano, head of the Association of Colombian Exporters.

Colombian beans, embodied by the image of sombrero-clad Juan Valdez and his mule, cost 27.42 cents more than the price of most-active New York futures on Feb. 13. The premium reached 28.85 cents on Feb. 4, the highest since at least 2001.

Similar premiums were reported for Costa Rican and Guatemalan beans, according to a Feb. 6 report from analyst F.O. Licht of Ratzeburg, Germany.

Stockpiles in warehouses monitored by ICE Futures U.S. on Feb. 12 reached the lowest since July 2007. Stockpiles held by shippers fell 32 percent from a year earlier to 17.26 million bags on Oct. 1, partly because consumption in coffee-exporting countries jumped 37 percent in the past decade, ICO data show.

Production Deficit

The financial crisis also may contribute to reduced output, according to Tiberius Group’s Bachofer.

“Coffee is very labor intensive and requires lots of fertilizer,” she said. “Financial credit is not as available as before. This may lead to lower inputs in these two areas. The reduced fertilizer input will mainly have an impact on the marketing year 2010-2011.”

Global demand may reach 130 million bags, exceeding supply by 6 million to 8 million bags in the year that starts Oct. 1, said Nestor Osorio, the ICO’s executive director. Brazil estimates its harvest will drop as much as 20 percent to 36.9 million bags this year as trees enter the smaller phase of a two- year crop cycle.

“It’s a very tight market,” Osorio said in a telephone interview from London. “The supply will be in deficit. There are no reasons to believe prices could come down.”

Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=ab0af188.BsA&refer=home

Source: http://www.sweetmarias.com/coffee.southamr.brasil.html#Brazil_Jacu

Exports of arabica beans were 27 percent higher in the first six days of July than in the same period in June, Brazil’s Coffee Exporters Council said on its Web site. Warmer and drier weather allowed farmers to collect and dry coffee beans after cold air and rain delayed the start of the harvest last month.

“We are starting to see a little pick-up in offers out of Brazil,” said Jack Scoville, a vice president for Price Futures Group in Chicago, referring to exports. “Weather has been good and the harvest has been moving along.”

Coffee futures for September delivery slid 8.6 cents, or 5.7 percent, to $1.433 a pound on ICE Futures U.S., the former New York Board of Trade. The drop was the biggest one-day decline for a most-active contract since March 17.

Coffee jumped 12 percent in the first half of this year, partly because harvest delays in Brazil’s Sao Paulo and Minas Gerais states tightened global supplies.

Temperatures in Brazil’s growing regions will be near or above normal in the next seven days with no frost in sight, Meteorlogix LLC said today in a weather report. Conditions will be “mainly dry,” the Woburn, Massachusetts-based forecaster said.

`Seasonal Pressure’

“Brazil’s harvest is accelerating, so normal seasonal pressure has begun,” Judith Ganes-Chase, a private analyst in Katonah, New York, wrote in an e-mail today.

This year, Brazil will harvest 51.1 million bags of beans, 36 percent more than last year, because trees are in the higher-yielding part of a two-year crop cycle, the U.S. Department of Agriculture has forecast. The harvest in Brazil usually runs through October.

Coffee also dropped amid a broader decline in commodities spurred by a rising dollar, according to Scoville and Ralph Hawes, head of the coffee trading desk at Sucden (U.K.) Ltd. in London.

A stronger dollar prompted profit-taking in the commodity market and “set a weaker tone” for the coffee price today, Hawes wrote in a report.

The U.S. Dollar Index, which values the U.S. currency against six major counterparts including the euro, rose as much as 0.6 percent before retreating. The Reuters/Jefferies CRB Index of 19 futures contracts dropped as much as 2.8 percent. A stronger dollar makes contracts more expensive for holders of other currencies.

Arabica beans, the main variety traded in New York, are grown mainly in Latin America and are used by specialty coffee companies including Starbucks Corp. Robusta beans, mostly traded in London, are used in instant coffee and are mainly grown in Asia, Brazil and Africa. A bag of coffee beans weighs 60 kilograms (132 pounds).

The seeds for the drop in coffee prices “have been sown over recent sessions as values have been systematically jacked higher day after day,” Hawes wrote. “The problem is that when prices collapse as they did today, there is no liquidity.”

“I think we are in a little bit of a range,” said Scoville, who predicted coffee may fall to as low as $1.40 a pound in the next week or so.

Source: http://www.bloomberg.com/apps/news?pid=20601012&sid=aiCRbjbwHLQQ&refer=commodities

The United States, China, France, England, Japan, Italy, Germany and Israel are some of the 30 countries that will participate in the International Conference on Coffee Science to be held in the city of Campinas, in the interior of the southeastern Brazilian state of São Paulo, between the 14 and 19 of September.

The objective behind the meeting is to discuss the most recent advances in coffee research. This year’s edition should include two central themes: coffee and health as well as consumption tendencies and coffee science.

But other matters should be covered, including agronomy, chemistry, biotechnology, processing and coffee improvement. Research made in different countries in each of these areas should be presented.

The Asic conference is organized by the Association for Science and Information on Coffee. In this year’s edition there should be 371 presentations about coffee, organized by researchers and scientists. The event is going to take place in Brazil under the aegis of the Campinas Agronomic Institute (IAC).

A total of 700 people are expected at the conference. They should not only be representatives of producer countries, as is the case with Brazil, but also of nations that consume the product.

“There should be farmers, researchers, technicians and professionals turned to production, industrialization and consumption of coffee. Indeed, they should be representatives of all areas of the coffee productive chain, from growing the plant to making coffee cups, coming to Brazil from all corners of the world and, thus, confirming the importance of the country to the international coffee scenery both as a producer and exporter, and being the second main consumer market,” stated the president of the organizing committee, Aldir Alves Teixeira.

Asic takes place every two years in a producer country and then in a consumer country. In Campinas, the meeting is going to take place at the Country House of the Royal Palm Plaza Hotel. The ASIC president, Andrea Illy, believes that the Brazilian edition is “gaining special interest due to the Brazilian leadership in the global coffee market and to the extraordinary transformations that have been taking place over the last ten years.”

Apart from Brazil, a country from which 250 registrations have already been received, other countries to participate include the United States, China, India, Kenya, Saudi Arabia, Indonesia, the Netherlands, France, Germany, Costa Rica, Austria, Japan, Portugal, Switzerland, Italy, Colombia, Canada, Israel, the Dominican Republic, Ethiopia, Ivory Coast, Tanzania, Finland, Mexico, Ireland, Austria, Uganda, the Republic of the Congo and England.

Source: http://www.brazzilmag.com/content/view/9545/1/

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