Brazil’s coffee exports grind to a halt in ‘peak season’

Brazil’s coffee exports grind to a halt in ‘peak season’
Brazilian coffee makes up about 30 percent of global coffee trade. The country’s farmers are rushing to offload their crops amid a currency crash. (Shutterstock)
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Updated 15 October 2020

Brazil’s coffee exports grind to a halt in ‘peak season’

Brazil’s coffee exports grind to a halt in ‘peak season’
  • Lack of containers, vessel space means merchants look elsewhere for crucial stock

NEW YORK: Coffee traders are struggling to ship cargos out of Brazilian ports because of a shortage of available containers or space in vessels to hold them, according to
traders and analysts.

Brazil’s economy is suffering due to the coronavirus pandemic, causing a 40 percent slide in its currency, the real. That spurred a flood of exports of now-cheaper goods, but imports have dropped sharply, causing the imbalance in containers that has led to delays.

That is a direct hit to Brazil, which with 30 percent of global coffee trade is the world’s largest exporter of the commodity.

According to shipping industry consultancy Datamar, there was an imbalance of nearly 80,000 boxes in Brazil in August, with around 251,000 containers leaving the country and only 172,000 arriving. By contrast, in January, 216,000 boxes arrived and 201,000 left.

Global shipping companies such as MSC and Maersk are fully booked for weeks to months in Brazil. Merchants say it is not feasible to currently export Brazilian coffee for prompt shipment, and what is possible can only be done at a higher cost.

“I sold coffee to a client in Spain and I’m still waiting for MSC to make containers available for the shipment,” said Nelson Salvaterra, a partner at Brazilian coffee exporter Coffee Selection.

MSC’s press office did not confirm that specific problem, and declined to comment further. Maersk said it was working to improve container availability. “It is clear that the coffee sector is entering into the peak season. It is highly important that producers provide the proper visibility on when to move stocks in advance,” said Julian Thomas, general manager for Maersk East Coast South America.

He added that there is no more room for shipments in October.

Coffee, unlike other soft commodities like sugar, is shipped via containers rather than in dry bulk vessels.

Christian Wolthers, a partner at US-based coffee importer Wolthers Douque, said he managed to find containers for a shipment out of Brazil, but there was no space in the ship and his merchandise was left at the port to be loaded onto another vessel.

Brazil’s trade surplus jumped to $6.16 billion in September, 38 percent more than a year earlier, due to the weak real. In recent months, Brazilian farmers rushed to sell their crops, boosting exports, as the weak currency means they receive more reais in dollar-denominated trade.

Foreign coffee sales that were planned ahead of time are being processed without much trouble, traders said. However, they said that some cargoes from Brazil may take longer to arrive, meaning global coffee merchants may need to substitute supply from other countries.


China economy grows in 2020 as rebound from coronavirus gains

China economy grows in 2020 as rebound from coronavirus gains
Updated 58 min 32 sec ago

China economy grows in 2020 as rebound from coronavirus gains

China economy grows in 2020 as rebound from coronavirus gains
  • Growth in the three months ending in December rose to 6.5 percent over a year earlier
  • China’s quick recovery brought it closer to matching the US in economic output

BEIJING: China eked out 2.3 percent economic growth in 2020, likely becoming the only major economy to expand as shops and factories reopened relatively early from a shutdown to fight the coronavirus while the United States, Japan and Europe struggled with rising infections.
Growth in the three months ending in December rose to 6.5 percent over a year earlier as consumers returned to shopping malls, restaurants and cinemas, official data showed Monday. That was up from the previous quarter’s 4.9 percent and stronger than many forecasters expected.
In early 2020, activity contracted by 6.8 percent in the first quarter as the ruling Communist Party took the then-unprecedented step of shutting down most of its economy to fight the virus. The following quarter, China became the first major country to grow again with a 3.2 percent expansion after the party declared victory over the virus in March and allowed factories, shops and offices to reopen.
Restaurants are filling up while cinemas and retailers struggle to lure customers back. Crowds are thin at shopping malls, where guards check visitors for signs of the disease’s tell-tale fever.
Domestic tourism is reviving, though authorities have urged the public to stay home during the Lunar New Year holiday in February, normally the busiest travel season, in response to a spate of new infections in some Chinese cities.
Exports have been boosted by demand for Chinese-made masks and other medical goods.
The growing momentum “reflected improving private consumption expenditure as well as buoyant net exports,” said Rajiv Biswas of IHS Markit in a report. He said China is likely to be the only major economy to grow in 2020 while developed countries and most major emerging markets were in recession.
The economy “recovered steadily” and “living standards were ensured forcefully,” the National Bureau of Statistics said in a statement. It said the ruling party’s development goals were “accomplished better than expectation” but gave no details.
2020 was China’s weakest growth in decades and below 1990’s 3.9 percent following the crackdown on the Tiananmen Square pro-democracy movement, which led to China’s international isolation.
Despite growth for the year, “it is too early to conclude that this is a full recovery,” said Iris Pang of ING in a report. “External demand has not yet fully recovered. This is a big hurdle.”
Exporters and high-tech manufacturers face uncertainty about how President-elect Joseph Biden will handle conflicts with Beijing over trade, technology and security. His predecessor, Donald Trump, hurt exporters by hiking tariffs on Chinese goods and manufacturers including telecom equipment giant Huawei by imposing curbs on access to US components and technology.
“We expect the newly elected US government will continue most of the current policies on China, at least for the first quarter,” Pang said.
The International Monetary Fund and private sector forecasters expect economic growth to rise further this year to above 8 percent.
China’s quick recovery brought it closer to matching the United States in economic output.
Total activity in 2020 was 102 trillion yuan ($15.6 trillion), according to the government. That is about 75 percent the size of the $20.8 trillion forecast by the IMF for the US economy, which is expected to shrink by 4.3 percent from 2019. The IMF estimates China will be about 90 percent of the size of the US economy by 2025, though with more than four times as many people average income will be lower.
Exports rose 3.6 percent last year despite the tariff war with Washington. Exporters took market share from foreign competitors that still faced anti-virus restrictions.
Retail spending contracted by 3.9 percent over 2019 but gained 4.6 percent in December over a year earlier as demand revived. Consumer spending recovered to above the previous year’s levels in the quarter ending in September.
Online sales of consumer goods rose 14.8 percent as millions of families who were ordered to stay home shifted to buying groceries and clothing on the Internet.
Factory output rose 2.8 percent over 2019. Activity accelerated toward the end of the year. Production rose 7.3 percent in December.
Despite travel controls imposed for some areas after new cases flared this month most of the country is unaffected.
Still, the government’s appeal to the public to avoid traditional Lunar New Year gatherings and travel might dent spending on tourism, gifts and restaurants.
Other activity might increase, however, if farms, factories and traders keep operating over the holiday, said Chaoping Zhu of JP Morgan Asset Management in a report.
“Unusually high growth rates in this quarter are likely to be seen,” said Zhu.