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.

Russia’s Lukoil lifts Iraq output as it swings to profit

Updated 25 November 2020

Russia’s Lukoil lifts Iraq output as it swings to profit

  • Lukoil claims to account for about 2 percent of global oil production

MOSCOW: Russian oil producer Lukoil said on Tuesday that it had reversed a loss into a profit of 50.4 billion roubles ($664 million) in the third quarter thanks to a rise in oil prices, while it had boosted oil output in Russia and Iraq.

Lukoil has faced a pandemic fallout as well as a weaker rouble, which has inflated its debt, denominated in foreign currencies. The company’s output has been also constrained by a global deal on production curbs.

The company had finished the second quarter with a loss of 18.7 billion roubles.

Lukoil said on Tuesday that it had started to boost its output at West Qurna-2 oil field in Iraq from the middle of October, by around 30,000 barrels per day (bpd), after cuts of around 70,000 bpd from May 1 and by 50,000 bpd more from mid-June, in accordance with the deal.

Lukoil, whose largest shareholders are its head, Vagit Alekperov, and vice president Leonid Fedun, also said it had raised its oil output in Russia.

The company said sales rose to 1.46 trillion roubles in the July — September quarter from 986.4 billion roubles in April-June.

The growth was mainly attributable to higher hydrocarbon prices, higher production of refined products at the group’s refineries, as well as higher trading and retail sales volumes, Lukoil said in a statement.

The company also began to recover its natural gas production in Uzbekistan in September.