Brazilian coffee growers unlikely to 'flood' ICE Futures U.S. when exchange begins accepting bean deliveries in March 2013, industry group says; bourse to trade Brazilian beans at 9-cent/lb. discount, discouraging use of exchange, industry insider says

Andrew Rogers

LOS ANGELES , June 28, 2012 (Industry Intelligence Inc.) – The ICE Futures U.S. is unlikely to see a 'flood' of Brazilian coffee when the exchange begins to accept deliveries of the beans next March, P&A Marketing International said, Bloomberg reported June 28.

The exchange started grading Brazilian beans in early June. The trading house is responsible for the sale of arabica beans, and the exchange will apply a 9-cent discount to each pound of Brazil’s beans when trading begins. Colombian beans currently trade at the exchange price, while coffee from India and Ecuador see discounts of 2 cents and 4 cents a pound, respectively.

Brazilian farmers can receive better prices outside the bourse and ICE’s planned discount will put Brazilian producers at a disadvantage when delivering to the house, according to Carlos H.J. Brando, a director at P&A in Brazil.

Coffee from Brazil would have to be sold at a discount of 16 cents a pound for the growers to enjoy a profit at the ICE, Volcafe, a unit of ED&F Man Holdings Ltd., said June 8.

The primary source of this article is Bloomberg, New York, New York, on June 28, 2012.

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