Arabica coffee from Brazil usually rated lower grade has arrived in big volumes on the world's main price-setting market, traders said, in a fresh challenge for hand-picked premium cherries from less efficient, smaller farms elsewhere in Latin America and Africa, Maytaal Angel and Gustavo Palencia reported for Reuters.
Photo Insert: Agricultural powerhouse Brazil grows almost half the world's arabica, much of it harvested by machine on large plantations.
Agricultural powerhouse Brazil grows almost half the world's arabica, much of it harvested by machine on large plantations. Yet, some of its cherries, known as unwashed or “natural” arabicas, have not previously been used for high-end benchmark coffee contracts around the world.
Now, global traders are adding these tasty Brazilian cherries to the bags used to settle these contracts, five traders told Reuters, marking a structural change set to weigh on world coffee prices in the long-term, the traders and four others in the industry said.
Brazil's coffee exporters association Cecafe confirmed these cherries were now being included in exchange stocks, saying it was because of their improved taste and quality.
The Intercontinental Exchange (ICE) did not say it was aware of the change in the types of cherries backing its contracts but said its grading process was designed to protect standards.
"Samples that present an unwashed flavor in the cup will fail grading," ICE said.
While the news could bring relief to taste-conscious consumers battling food price inflation, it spells more gloom on long-struggling Latin American and African farms where coffee trees grow on steep, shaded slopes unsuitable for Brazilian-style harvesting vehicles.
"We are in danger," said Dagoberto Suazo, president of the Central de Cooperativas Cafetaleras in Honduras, asked by Reuters about the new development.