Newsletter
Wolthers America Inc. 

09/02/2011

John Parry - Parry Estate/Hawaii, Diogo Macedo, Fazenda Recreio and Chriostian Wolthers - center
 
Natural Bourbon - "The Best I have cupped yet!"
 
Coffee bins at holding Natural and Pulp Natural preparations
 
Visiting Henrique Barbosa's Farm in South Minas
 
At the Barbosa's Fazenda Mariano - a deliciious  farm meal
 
A classic in the coffee fields - Ford Willis Rural 82
 
Nucoffee/Nutrade team at Santa Alina Farm - Vale da Grama (SP)
 
In Boa Esperanca - Agro Pecuaria Santo Antonio farm  bus carries a poster ; "Nucoffee takes the Apsa Coffees beyond our frontiers"
 
500.000 Plant nursery at Santo Antonio Farm - Yellow Catuai
 
Santo Antonio and Nossa Senhora Aparecida protecting the workers and the farm
 
Producer "Pellucio" SCAA 86.00 scoring New Crop at Nucoffee's lab in Varginha (MG)
 
Sunday afternoon at Santos Beach
Christian does the Brazilian coffee Belt - Part III
 

It's the 6th time I cross the equator during this Brazilian coffee harvest season, now returning from dynamic Sao Paulo to beautiful Miami. If you followed my last reports, you know that the harvest is now over, Brazilian producers have collected the best quality ever and that volume is short to serve both the internal demand and  export commitments. You also know that the screen size is about 30% smaller but Pulped Natural preparation will reach the record volume of 6 to 7 million bags within a Total 41 - 42 million bags crop.

 

So what's new after this trip?

As I listen to Tom Petty and the Heartbreakers on my Ipod, stare down at Colombia under my left wing and see Central America just ahead on the flight map, I realize that the coffee market will be influenced fundamentally for a longer period.

 

Pocos de Caldas

 

As much as Brazilian producers should be celebrating prices and high quality of their crop, they are the first ones to observe and learn that their volume expectancy has become a surprisingly lower reality. I toured many farms, warehouses and Coops these last four months, what I saw this time/trip were lesser inventories for the period, voluntary producer retention of new crop stocks and an uprising purchase competition between local roasters and exporters biding on mostly " Not for Sale " coffees.

 

Differentials have moved again to a tighter zone under the C Market and wider spread above it as specs and industry buy into the fundamental reality. What can come next from Brazil before we start looking into the Mild and Other Mild coffee realities? 

 

 

  

John Parry - Parry Estate Hawaii and Diogo Macedo - Recreio Farm Vale da Grama/SP

Well, we better start praying for abundant Spring rains to shower soon over the whole Brazilian coffee belt. It's very dry now and September 30th is the maximum plantations will resist without natural precipitation, thereafter we can start counting losses for the 2012/2013 crop.

 

On the other hand, I believe rains will resume as they do in nine out of every ten years, thereafter, a sound and uniform flowering will parade to the whole coffee industry's relief, producers included!

 At that point, NY prices will probably return to, $ 2.50 - 2.60 as a base, falling back from $ 2.90 - 3.15 depending on how much the dry spell lasts over the Brazilian coffee belt.

 

It will probably be after this lower price interval, that the next challenge begins; Continued producer retention in Brazil ( they retained their stocks even when NY Fell to $ 2.35 this last August ), Short shipments out of Brazil, continued short shipper positions, internal roaster demand and a producer maxed out profit fiscal year holding back new sales before Jan 01/2012.

 

Recreio Farm
Natural Prep Patio

My estimated and announced coffee deficit in Brazil of 5 to 7 million bags for late 2011 or first quarter 2012 periods will most likely show its face before December 2011. This could bring the prices/NY C market to $ 4.00 for some weeks on the December and March positions. By then,  Brazilian government stocks of 1 .4 million will probably be auctioned  and shippers will have to re-schedule already delayed shipments/commitments, only 2.3 million bags have been shipped this August and 2.0 million in July/11.

 

By the new calendar year, relief will come in the form of producer sales of those previously voluntary retained stocks, an equalized Pis/Confins tax relief internally in Brazil and a lesser local roaster demand thru the Summer months. Don't expect any extended crash of prices, these will most likely return cautiously to $ 3.50, 3.00 then 2.60/2.40 by April/12.

 

 

News from Colombia will probably not be good due to yet again, excessive rains. 
A window to Vale da Grama

 

Other Milds will at best, show mixed signals regarding productivity/volume.

 

In the New Year's 2nd trimester, Brazilian producers will try to anticipate the harvest as much as possible, they have now learned to pulp green/unripe fruits! At least One Million bags of pulped green fruit beans can be available by May-June/2012!, this, in an attempt to mend the short carry deficit and promote sales against  still valued NY price levels.

 

By the way, the title Christian does the Brazilian Coffee Belt for this series of reports was inspired on my good friend, Greg Northrop from Mud Coffee - The Mud Truck in NY.

Greg sent me a series of emails about his family summer trip through my other mother country "Greggy does Denmark! "

 

Skoll Greggy!

 

 
APSA General Manager agronomist Kelcey Resende, John Parry and CBW at the Estate Gate
 
JP enjoying a "great" espresso at O'Coffees "Octavio" cafe in
  Sao Paulo
Wolthers America Inc.
500 SE 15th Street Suite# 118

Fort Lauderdale, Florida 33316

P#954-7970078 or 954-7691274

 info@wolthersamerica.com

 

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