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’

  • 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 aims for sustained and healthy economic development

Updated 30 October 2020

China aims for sustained and healthy economic development

  • Beijing to let market forces play decisive role in resources allocation, report says

BEIJING: China is targeting sustained and healthy economic development in the five years to 2025, with an emphasis on a higher quality of growth, the Xinhua news agency said on Thursday, citing the ruling Communist Party’s Central Committee.

President Xi Jinping and members of the Central Committee, the largest of the ruling party’s elite decision-making bodies, met behind closed doors from Monday to lay out the 14th five-year plan, a blueprint for economic and social development.

China’s external environment “is getting more complicated,” the agency said, adding, “There is a significant increase in instabilities and uncertainties.”

BACKGROUND

China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

However, the country’s development was still in a period of important strategic opportunities, despite new challenges, it said.

It added that China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

China will also deepen reforms and let market forces play a decisive role in resources allocation, the agency said.

China will promote a “dual circulation” model, make self-sufficiency in technology a strategic pillar for development, move to develop and urbanize regions, and combine efforts to expand domestic demand with supply-side reforms, it added.

The “dual circulation” strategy, first proposed by Xi in May, envisages that China’s next phase of development will depend mainly on “domestic circulation” or an internal cycle of production, distribution and consumption, backed by domestic technological innovation.