Depreciation stimulates the price of Brazilian coffee exports to fall

The Brazilian dollar hit a four-year low, accelerating Brazilian coffee exports, expanding the supply glut and sliding costs such as Starbucks and Kraft Foods. Coffee exports rose 20% in the first half from a year earlier to 13.385 million bales, or 800000 3000 metric tons, the Ministry of Trade of Brazil, a big coffee grower, said on the 1st. The Brazilian dollar depreciated by 9.4 per cent in the second quarter, the highest among 24 major emerging market currencies, raising sales of US dollar-denominated coffee and encouraging exporters to draw on their largest inventories since 2007.

Accelerating coffee sales after four years of global coffee glut will push down coffee prices by 11 per cent by the end of the year to $1.08 a pound, according to 18 analysts polled by Bloomberg. "the depreciation of the Brazilian dollar is definitely good for exports, making Brazil a more active coffee exporter," said Voses, a trader at Wolthers & Associates. Brazil has a lot of coffee, but there is not enough space to store it, so producers have to sell it. I expect to see more positive sales prices. " According to the Colombian coffee growers association, Colombian exports rose 32% in the first five months of this year, mainly because the peso depreciated 7.1% against the dollar. Colombia is the second largest coffee grower in Arabica. Over the same period, sales in Peru, South America's third-largest coffee grower, fell 31 per cent, mainly as buyers turned to Brazilian supplies. Arabica beans on the American intercontinental futures exchange in new York have fallen 61% since hitting a 14-year high in may 2011. The drop in the price of coffee beans prompted JM Smucker Co.2 to lower the price of its best-selling US brand Folgers every month and expanded Starbucks' profit margins in the second quarter.

Coffee bean futures prices have fallen 16 per cent over the year to $1.214 a pound, down 2.7 per cent from the S & P Goldman Sachs commodity spot index, which tracks 24 commodities. The MSCI global index rose 4.9 per cent. The dollar index rose 4.4%. Us debt fell 2.5 per cent, according to the Bank of America index. Starbucks, the world's largest coffee chain, will grow 21% in the third quarter of the year to the end of June, according to median estimates of 13 economists polled by Bloomberg. Starbucks shares are up 25% over the year.

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