Sao Paulo, Oct 12 - Importer demand for Brazilian coffee has been picking up, but farmers have been reluctant to accept going rates, with several fundamentals leading them to believe prices still have room to climb.
"We are having difficulty buying good coffees," said trader John Wolthers at the Comexim exporter in Santos, Brazil's main port town, who said many buyers had been unwilling to sell.
Strengthening their hand is a shortage of high quality arabica beans this year in the world's top grower. Rains that fell out-of-season landed on beans spread out to dry on farm yards, causing them to ferment and spoiling their taste.
There is no firm figure for what quantity was damaged, but cooperatives and exporters willing to hazard a guess estimated around 30 percent of coffee was damaged, meaning it would be sold as cheaper rio or riado grade, not superior fine cup.
Another harvest is not due here until next May.
Growers who bought government option contracts in July also look set to sell 1 million bags of arabica to the state when the first such paper expires in mid-November. It promised holders of that option 303.50 reais ($174.72) per bag, well above the market price.
Wolthers said business had been brisk for washed coffees, which have been increasingly sought after in Brazil due to short supplies in Colombia. Colombia's production is seen falling further next season.
Flavio Ribeiro, from the Flavour Coffee brokerage in Rio de Janeiro, said exporters who made sales several months ago and now had to source coffee to deliver had little room to maneuver on price, penalized by a weaker dollar.
"The internal market is firmer than the external one. Prices in reais are higher than the (futures) market in New York," he said.
The head of Brazil's Council of Coffee Exporters said a strong internal coffee market this year was behind a sharp fall in exports of robusta beans used in instant coffee products.
Below is the range of prices in Brazilian reais at which coffee was traded during the week, according to the Flavour Coffee brokerage.