The availability of green coffees in the Brazilian market - both arabica and robusta - increased to their highest level in 16 months as farmers hiked sales of old-crop stocks before starting harvest of a large crop, according to an industry supply index. The availability of beans jumped to 7.22 points on a point scale of 1 to 9, according to an index published late on Wednesday by Abic, an association of Brazilian coffee processors. The previous measurement showed 6.08 points.
A reading of 7 points or more means that the supply is robust, and since its creation in late 2016, the index had never surpassed that level until now. Nathan Herszkowicz, executive director at Abic, said that the main factor for the increased supply was most likely because "we are finishing the inter-harvest period," and that farmers were selling now to finance the upcoming harvest.
Brazil's official agricultural statistics agency Conab expects a record coffee crop this year of around 56 million bags. The selloff comes despite low prices. Fine arabicas (grade 6) measured by think-tank Cepea/Esalq in South Minas Gerais state are priced 9 percent lower for the year. The expectation of a record crop in Brazil, the world's largest exporter, and high global supplies are keeping prices low. Herszkowicz does not see much room for prices to fall further, adding that supply and demand in Brazil will even out, despite ramped-up production.