October 25, 2017 / 7:39 PM / a year ago

Spot Brazilian coffee supplies tighten on shipping cuts -importers

NEW YORK/SAO PAULO, Oct 25 (Reuters) - Supplies of prompt Brazilian coffee have tightened in the United States and Europe as importers say some shipping companies are cutting container availability from the world’s biggest grower.

Brazilian coffee exporters warned importers that some shippers are reducing container capacity by up to 20 percent to northern Europe, while U.S. importers said they are facing tightened availability in November and December.

While some importers attribute the reduction to delayed dredging at Brazil’s Port of Santos, others point to the drop in overall trade following the weakening of Brazil’s currency amid a political scandal.

“The fine cup quality Brazil beans in general are pretty much gone, here and especially in Europe,” said Rodrigo Costa, director of trading for Comexim USA.

Some shippers that transport containers between South America and northern Europe said they are cutting the number of vessels used because they believe there is too much capacity.

In an email seen by Reuters, one Brazilian exporter said two shipping companies will reduce their space on all vessels to northern Europe by 20 percent and a third company by 5 percent. The reason was not provided.

One large U.S. coffee importer estimated this will equate to a reduction of 10,000 to 20,000 containers of coffee leaving Brazil each month.

“You can’t get a (container) booking out of Brazil right now through to the end of the year,” the U.S. importer said.

Brazil’s coffee exports in September were unexpectedly low, down 24 percent year-on-year, according to the country’s exporters association Cecafé.

This has resulted in stock draws and a surge in demand for Brazilian natural arabica coffee on the spot market, the U.S. coffee importer said.

“November shipments are being put on vessels for February. It’s a real issue,” said one European coffee importer.

As a result, the differentials on the spot market are narrowing, the importer said, adding that the price of some fine cup Brazilian beans moved from a discount under the benchmark “C” contract to nearly par.

There is some buffer for importers at the moment: Total coffee inventories at importing countries reached an eight-year high in June, International Coffee Organization data shows. ICE Futures U.S. certified stocks of Brazilian coffee are up sharply from a year ago.

Lucio Dias, head of sales at Cooxupé, the world’s largest coffee cooperative and Brazil’s No. 1 exporter, said their flow has been normal so far, though he has heard that some other exporters faced delays on shipping coffee abroad.

“Since stocks of Brazilian coffee in Europe and in the U.S. have been falling recently, there could be a problem with stock replenishment ahead,” Dias said.

Eduardo Heron, technical director at Cecafé, said that while the problems regarding space availability are being investigated, problems at Port of Santos caused dredging services to be delayed, forcing some ships to carry just 80 percent of their capacity.

“As a result, there was an accumulation of containers that companies are still dealing with. They were passed on to coming ships, delaying deliveries,” Heron said, adding that the dredging problem has been solved. (Additional reporting by Ana Ionova in London and Michael Hogan in Hamburg; Editing by Marguerita Choy)

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