SAO PAULO: Brazilian coffee farmers reduced the amount of lots they are offering for sale in the local market as they wait to see if forecasts for rains in the next days materialize in top producing regions.
Brokers and a representative for Brazil's coffee processing industry said producers cut their offers in the last days possibly as a precaution in the case coffee areas get less rain than necessary later this week and early in October.
Most Brazil coffee areas are suffering with a long dry spell that has caused trees to lose leaves and could result in poor flowering, a key phase to determine the size of next year's crop. Farmers and coffee cooperatives are already saying production in 2018 will not be as large as previously expected.
"We have heard producers are reluctant to sell. They see that the crop this year was smaller than expected and foresee problems also for next year," said Eduardo Carvalhaes, a partner at brokerage Escrit?rio Carvalhaes in Santos.
Brazil's coffee industry association Abic gauges the flow of coffee into the market on a scale going from 1 to 9. The index known as IOCI closed last week at 5.45, compared with 6.16 in the week before, signaling a drop in trade.
"Evidently there is coffee in the market, hard to say why producers are refraining from sales. Maybe they would like to see better prices at this point," Abic's director Nathan Herszkowicz said.
Although the forecast is for rains in the next 10 days, they might not be widespread, so it has been hard for the market to gauge possible impact on crops.
According to the Thomson Reuters Agriculture Weather Dashboard, the south of Minas Gerais state, for example, should get as much as 98 millimeters (3.58 inches) of rain, while the also important Zona da Mata region in the same state is expected to get only 26 millimeters (1.02 inches).
For some analysts, it is early to say that current dryness will damage next year production.
Aroldo Oliveira Neto, who oversees crop projections for government agency Conab, said coffee trees can recuperate when conditions are favorable. He said flowering can recover in certain crop years, compensating possible losses from irregular early flowerings.
Thiago Cazarini, a broker at Cazarini Trading Company in Minas Gerais, has a different opinion. "Arabica potential has already been diminished," he said.
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