A reverse auction on Wednesday that aimed to attract eventual suppliers of robusta coffee in Brazil failed to close any deals, according to the official agency providing the auction's platform and the country's instant coffee industry. Brazil's instant coffee producers association (Abics) said suppliers did not show interest in the bids presented by processors at the auction, which had the aim of negotiating up to 213,500 bags of coffee to help relieve a tight market.
Brazil's food supply agency Conab, who provided the electronic system for the auction, confirmed the outcome saying all eight rounds of bids from robusta coffee buyers went unanswered by farmers and cooperatives. The world's largest coffee producer and exporter is facing a shortage of the robusta type, used mostly to produce instant coffee, after two years of drought in the main producing state Esp?rito Santo depleted stocks.
Brazil's Agriculture Ministry even decided to allow robusta imports for the first time ever, but the decision was overturned by President Michel Temer after pressure from a congressman linked to coffee farmers, who oppose any imports. The auction was proposed by the Agriculture Ministry as a way to test farmers' allegation that there were enough supplies in the country.
"Even when the bids came above current market prices for robusta, there were no deals, which reinforces the reality of a very tight market," Aguinaldo Lima, a director at Abics, told Reuters. One of the bids in the auction reached 472 reais per 60-kg bag of robusta, while current values for the product in Esp?rito Santo hover around 450 reais. Brazil is also the largest exporter of instant coffee, but shipments are falling as industries struggle to find raw material.
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