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Brazil Poised for Bigger Slice of Coffee Market

Source: Reuters
09/04/2009

Sao Paulo, April 9 - Top coffee grower Brazil is set to grab an even bigger slice of the global market thanks to a favorable exchange rate and smaller crops from competing growers, the head of Brazil's coffee exporter council, Cecafe, said on Wednesday.

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Data from the International Coffee Organization (ICO) show the Latin American country expanded its presence as a world coffee supplier, accounting for 34.6 percent of the market between October 2008 and February 2009, compared with 30.8 percent in the same five-month period a year earlier.

Brazil's currency <BRBY>, the real, has fallen around 30 percent in value against the dollar since peaking last August, making the country's coffee exports cheaper for importers and giving it a new, competitive edge.

Roasters have been more inclined to turn to its neighbor Colombia to obtain higher qualities but its harvest has been hampered by poor weather and renewal of aging trees. This has reflected in high premiums being paid for the restricted available supply there.

Cecafe's chairman, Joao Antonio Lian, said there was likely to be a shortage of some Central American arabica also.

"Brazil's clients abroad are benefiting from our (large supply)," he told Reuters in an interview, pointing out that Brazilian coffee would help buffer the shortage from these other origins.

Exporters expect stronger demand from buyers turning further south to Brazil this year to obtain beans.

Lian said roasters' expectations of a downturn in demand had proven unfounded and he said many were now seeking to build up stocks, which they had been running down in the expectation of slower sales.

Brazil's government crop supply agency, Conab, expects the forthcoming 2009/10 season to turn out between 36.9 and 38.8 million 60-kg bags but this is the most conservative estimate so far.

Industry sources, including Lian, expect a larger harvest of around 40 million.



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