SAO PAULO, Aug 26, 2010 (Dow Jones Commodities News via Comtex) — Volatile international and local coffee prices are confounding buyers and sellers in Brazil this week. December coffee on ICE Futures U.S., the most active contract, soared 5.80 cents, or 3.5%, to $1.7240 on Thursday as funds renewed buying after the market had plunged 12.4% this week. Coffee prices has been moving very fast and it is difficult for many roasters abroad to react quickly to the volatility, said John Wolthers, a trader at coffee exporter Comexim in Santos, a Brazilian port city that is a key juncture in the export trade. In Brazil–the world’s top coffee producer–bean prices are attractive for the producers, but roasters are cautious of paying the high prices or premiums, Wolthers said. In Brazil’s spot market, good-quality arabica coffee, which allows for defects in some of the beans, was trading at between 315 Brazilian reals ($179) and BRL320 per 60-kilogram bag on Thursday. This compared to BRL310 per bag on Wednesday. Despite the arrival on the market of a new coffee crop from Brazil–with 2010 to 2011 set to be a high production year in the biennial arabica cycle–short-term supply problems continue to stimulate a drawing down of world stocks. The International Coffee Organization said that the bumper crop of 54.6 million bags being harvested in Brazil, will be just enough to meet demand. But world coffee prices will likely remain firm due to tight nearby supplies, Nestor Osorio, ICO executive director said. These are certainly strange times for coffee buyers and sellers alike. A trader at export company Swiss Coffee House in Santos said that buyers and sellers in Brazil never imagined that prices would rise this high with Brazil expecting a bumper coffee crop. Nobody knows in which direction prices will go, so people are cautious, he said. Moreover, although producers in Brazil have managed to sell small volumes of coffee on Thursday as prices rose, they often struggled to agree on the price or premiums with buyers, the trader said. For instance, discounts for a good quality arabica coffee Thursday saw sellers looking for 22-25 points under the December contract on ICE. Buyers, however, wanted to pay 28-30 points under the same contract. With a large spread like this, getting an agreement is difficult, he said.

Aug. 16 (Bloomberg) — Coffee production in Burundi, which relies on the crop for half its export earnings, may be as much as 26 percent less than forecast this year after a drought cut yields, the industry regulator said.

Output may be 23,000 to 25,000 metric tons, compared with an earlier estimate of 31,000 tons, Jeremie Ndikumana, a marketing officer at the Burundi Coffee Regulatory Authority, known as Ocibu, said in an interview on Aug. 13 from the capital, Bujumbura. The revised forecast is four times higher than the 6,000 tons produced last year.

Yields were lower than anticipated because some coffee trees didn’t fully recover from last year’s drought in the Central African country, he said.

Production slumped in 2009 from 25,000 tons a year earlier because of the drought. Output had risen in 2008 after a 15-year insurgency ended when rebel fighters signed peace accords with the government.

At least 11,392 tons of green beans, or half the revised projection, was processed by Aug. 8, Ndikumana said. Fully washed coffee accounted for 3,946.4 tons, while the rest was semi-washed coffee, he said.

Burundi consumes less than 3 percent of its coffee, which is reaped from March to July, and exports the rest. Agriculture generates about 44 percent of economic output in the East African country, according to the African Development Bank.

NEW YORK, Aug 04, 2010 (Dow Jones Commodities News via Comtex) — Coffee prices rose Wednesday from recent losses as speculators continued to drive volatile trade. Nearby coffee for September delivery 3.10 cent, or 2%, higher at $1.6975 a pound on ICE Futures U.S. Coffee prices have rallied 23% since June. Both fundamental and technical factors are driving the market, but fund interest seems to be the main catalyst in recent choppy trade. World supplies of high-quality arabica coffee beans are tight after two years of poor harvests in Colombia and Central America. Though a bumper crop is flowing in from Brazil, there is indecision in the market as to whether those beans will be of sufficient quality to meet market demand. Available premium arabica supplies are tight, particularly ahead of the late fall harvest in the main origins of that coffee. In the meantime, fund traders are pushing prices. “Funds are looking for something to happen,” said Sterling Smith, market analyst at Country Hedging in St. Paul, Minn. “Perhaps a major setback in production.” September coffee is establishing a new range from $1.60 to $1.80, Smith said. “Prices can stay in this box for a very, very long time,” he said. ICE coffee open interest–the number of active positions left at the end of the session–decreased by 2,794 lots Tuesday to total 166,182 lots, according to exchange data. Volume was estimated at 21,436 lots, according to exchange data. In options, approximately 8,980 calls and 1,983 put options traded. ICE Change Range Sep $1.6975 +3.10 pts $1.6760-$1.7170 Dec $1.7085 +3.20 pts $1.6850-$1.7270

With fewer than 400 individuals surviving in the wild, the Sumatran tiger continues to find refuge in Indonesia’s Bukit Barisan Selatan National Park, a World Heritage Site on the southern tip of Sumatra Island. But the critically endangered feline’s habitat is rapidly shrinking. Illegal squatters have already converted nearly 20 percent of the 900,000-acre (356,000-hectare) park to farmland for the cultivation of coffee, pepper and other crops. And a large post-tsunami influx of immigrant settlers from the provinces of Aceh and North Sumatra has only increased pressures on the resource-rich protected area.

Despite government efforts to evict as many as 15,600 families who have built semipermanent homes within the park, the influx continues, endangering not only the Sumatran tiger but a number of other wildlife species including the Sumatran rhino and the Sumatran elephant — three of the world’s most endangered mammals. The animals’ dwindling and increasingly fragmented habitat has only fueled incidents of confrontations with humans and opportunities for poachers.

“Without effective law enforcement, encroachment into the park will continue to destroy animal habitat,” explains Rainforest Alliance project coordinator Qori Nilwan Ishaq. “But law enforcement alone is not enough. The people living in this area need an incentive to conserve the park’s biodiversity.”

In partnership with WWF — which has been driving attention to the problem since the organization’s 2007 investigation that found farmers were growing coffee on more than 111,200 acres (45,000 hectares) of park land to produce over 19,600 tons of coffee annually — the Rainforest Alliance has been helping to support coffee farmers and traders as well as local institutions and organizations through the promotion of sustainable coffee production. Sustainably farmed beans are not only better for the environment, but they often yield a higher price for the farmer.

Many of the squatters within the park boundaries inefficiently cultivate low-quality coffee, which fetches minimal prices. By buying sustainably farmed beans from coffee growers outside of the park boundaries companies can provide an economic incentive that can help prevent further encroachment in the park. Kraft Foods and ECOM — the world’s third largest coffee trader — are supporting the Rainforest Alliance’s work on Sumatra.

“The Rainforest Alliance is not specifically working to stop encroachment of coffee farmers into the park,” explains project coordinator Qori Nilwan Ishaq. “But we’re working to make sure that coffee farmers and traders on the park border comply with the Rainforest Alliance Certified guidelines.” Since the project started, one group of farmers has earned certification and is enlarging its group, while another trader’s group has recently completed an audit. And there are new applications from other traders, which would engage an even larger number of small farmers –- each of them smaller than two acres (under one hectare) on average.

To qualify for Rainforest Alliance certification, the farmers are learning to make compost naturally and to interplant their coffee with other plants including ginger, elephant grass and fruit trees, which can help to slow down erosion. They are also eliminating their use of certain herbicides such as paraquat, while reducing their use of agrichemicals overall.

Farmers in the certification program are increasing their coffee yields and getting a better price for their coffee. According to Ishaq, “Biodiversity is maintained and farmers are benefiting economically. This gives squatters the incentive to move outside the park boundaries.” Already deforested land is available outside the park.

Mexico is likely to produce 4.6 million 60-kg bags of coffee in the 2010/11 cycle, which will begin in October, 5 percent more than in the current season, Rodolfo Trampe, head of the national coffee association Amecafe told Reuters in an interview on Monday.
Along with the output boost, Amecafe is aiming to increase the amount of coffee labeled as specialty, organic, or sustainable to between 20 and 25 percent next year, up from just 7 percent of the coffee now produced nationwide.
Mexico has fallen behind some of its Central American neighbors, like Guatemala and Costa Rica, which have worked to bring up the traceable quality of their coffee in order to tap international buyers willing to pay a premium for top-end beans.
“We don’t buy coffee from farms in Mexico because its hard to find coffee with guaranteed high quality,” Starbucks representative Alfredo Casas said at an event in Mexico City on Friday where Amecafe launched its new certification initiative.
To raise standards, Mexico is partnering with U.S.-based organization Quality Coffee Institute to implement a system to certify different types of beans under its “Q Coffee” label.
“In Mexico we’ve lost the ability to distinguish between good and bad coffee. The certification process will give us more access to international markets,” Francisco Piedragil, a coffee farmer and head of the coffee council in the southern state of Guerrero, told Reuters at the event.
Mexico’s coffee production has been declining since the beginning of the decade when prices plummeted on a glut in global supply.
Coffee prices have rebounded since then and Mexico wants to edge into niche markets where growers can make long-term contracts with buyers to shield themselves from some of the market’s volatility.
Certifying a significant chunk of Mexico’s coffee with a quality seal could earn the industry an additional $80 million a year, Amecafe consultant Manuel Diaz said. The international market for specialty coffees is growing 20 percent each year, he added.
Mexico’s 2009/10 coffee crop is seen at 4.4 million 60-kg bags, down from the previous cycle after suffering from a cold snap near the end of last year.
Recent rains from tropical storms that have battered parts of Mexico’s coast do not appear to have had a serious impact on the coffee crop, Rene Avila, an operations coordinator at Amecafe, said at Friday’s event.
“We hope that despite the rains … there will be good production,” Avila told Reuters, referring to the 2010/11 season.