| NEW YORK, July 11
NEW YORK, July 11 U.S. coffee traders say they
face months-long delays in getting shipments as suppliers from
Central America to Asia push to revise contracts, the latest
sign that the meteoric rally in arabica futures earlier in the
year has disrupted trading.
At least one supplier is demanding customers fork out more
cash for beans that were contracted before arabica prices nearly
doubled in the first few months of the year as a long drought
scorched the coffee belt in top grower Brazil.
In March, some local traders in Colombia ripped up contracts
as prices took off, but this is the first time since the rally
that U.S. traders have said suppliers have ditched efforts to
negotiate more flexible terms and are using tougher tactics.
One U.S. importer who spoke on condition of anonymity said a
supplier is holding his coffee ransom unless he pays more than
what was originally agreed.
"They say, 'Give me more money and I'll deliver'," he said.
He is owed three lots (112,500 lbs) of arabica coffee, which
are now worth $183,375 based on futures prices, roughly $50,000
more than before the rally that started in late January.
For now, he said will not bow to the demands.
He added that seven containers (roughly 2,100 60-kg bags) of
arabica from Costa Rica, a small high-quality producer, that
were due to land in the United States in December 2013, have
still not arrived, forcing him to buy elsewhere at higher
prices, while still holding the exporter to the contract.
Another importer, who also did not want to be named, said he
has encountered similar problems.
"It is hard getting the coffee we are owed," he said, adding
that he has agreed to more flexible delivery times and switched
origins when possible.
Such disruptions are limited in scale for now, but highlight
the impact of the volatile price moves and of concerns about
availability, rekindling memories of rallies in 1997 and 2011,
when traders said suppliers also sought prices higher than
previously agreed on.
The disputes also come as supplies of high-quality beans
from Central America have slowed to a trickle after a leaf
disease called "roya" wiped out swathes of crops, and as
harvesting gets underway in Brazil.
Large U.S. roasters such as Starbucks Corp,
Folgers-maker J.M. Smucker Co and Maxwell House-maker
Kraft Foods Group Inc have responded to the price rally
by raising retail prices for the first time since 2011.
Some exporters may be waiting for a resurgence in prices
even as the worst fears about crop damage in Brazil have
subsided, sending the market down 25 percent from the April peak
of $2.19 per lb.
"When people sell cheap, they're always delaying, sending
back qualities, buying time," said Ernesto Alvarez, chief
executive of large importer COEX Group in Miami.
Central America's worst-ever outbreak of roya, an air-borne
fungus that damages and sometimes kills coffee trees, has
already forced some suppliers to postpone deliveries, in some
cases, by as much as a year.
Traders have looked to Peru to replace lost supplies, but
shipments from the early harvest there have slowed after roya
affected low-altitude plantations more than expected.
COEX has bought more beans from Colombia, the world's
biggest producer of high-quality washed arabica, and drastically
less from Central America and Mexico this year.
Even so, shipments from Brazil are late, Alvarez said.
(Reporting by Marcy Nicholson; Editing by Peter Galloway)