Futures Market News
Brazil declines to stimulate coffee prices
Jul 06, 2010 01:59 PM
The government of Brazil chose not to exercise its options to buy 5 million bags of coffee after the price surged, according to Bloomberg News' interview with Gerardo Fontelles of Brazil's Agriculture Ministry.
Coffee futures rose through June as analysts feared that cold weather and rain might ruin Brazil's crop, but fell as the month ended. Brazilian farmers put pressure on the government to buy up coffee in order to boost the price and help the farmers improve their margins.
Brazil is the world's largest exporter and producer of coffee, selling mostly arabica beans which are used in gourmet coffee blends and whole-bean sales. The nation also produces a smaller quantity of robusta coffee beans, which commands a lower price than its cousin.
Robusta beans are generally regarded as less flavorful and contain a much higher quantity of caffeine. The main uses of robusta are instant coffee and cheaper blends, in addition to espresso brewing, where robusta is said to produce a better crema, the foam on top of freshly-brewed espresso.
Last month, the Agriculture Ministry said that Brazil's harvest of coffee beans may reach 47 million bags this year, after a smaller harvest last year of just 39.5 million bags.
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