Flashes
7741 views June 17, 2016 posted by Maja Wallengren

Morgan Stanley Reports Brazil Coffee Rain Damage And Mkt Biased Against Losses, Ag Agencies Confirm As Much As 36% Of Arabica Crop Hit

  Share...

JUNE 17 UPDATE:
*New report by New York-based financial services corporation Morgan Stanley says the damage in Brazil from unseasonal heavy rains during May are potentially as high as 36 percent of the TOTAL harvest in the key coffee producing regions of Southern Minas and Sao Paulo, areas that account for over 60 percent of Brazil’s total harvest and over 80 percent of the Brazilian Arabica crop. The figure for the scale of the potential rain damage was not Morgan Stanley’s own research or evaluation but attributed to the Brazil Farm Ecnomy Institute, IEA.
*Morgan Stanley also say that “a bias exists” from trade and managed money to ignore the extend of losses in Brazil
*Morgan Stanley also CONFIRM PROJECTIONS by SpillingTheBeans that the current harvest is between 25-50 percent completed, saying actual figures are at 34 percent complete by June 14th, leaving AMPLE room for weather impact to keep the new coffee in Brazil vulnerable.
–SpillingTheBeans has NOT seen the original report, only extracts. Stay tuned for more updates!
(MORE)

JUNE 16:
*Brazil’s SOMAR says new intense cold front provoked by La Niña / La Nina can continue to hit coffee regions in Brazil across Southern Minas, Sao Paulo and Parana for a full 3 months more all the way through September. See full story here (in Portuguese), English translation coming up:Brazil’s coffee regions at frost risk for 3 more months as La Nina cold extended

*SOMAR AgroMeteorologist Marco Antonio dos Santos Confirms “There HAS been damage in Southern Minas, Sao Paulo and Parana – there will be losses.” See the full interview here (in Portuguese), English translation coming up:Brazil’s Somar CONFIRMS frost damage to coffee in Southern Minas, Sao Paulo and Parana

JUNE 16–Active ICE September Arabica prices are down 1.00 cent at $1.3910 per pound (10:55a.m.EDT) as bears in the market DESPERATELY try to keep the prices below the psychological barrier of $1.40/lb while switching positions from near-expired July. Highly manipulative!

JUNE 15–SOMAR AgroMeteorologist Marco Antonio dos Santos Confirms:
“There HAS been damage in Southern Minas, Sao Paulo and Parana – there will be losses”

*Frost damage now CONFIRMED in at least 5 Southern Minas coffee regions including Muzambinho, Cabo Verde, Monte Verde, Poços de Caldas and Maria de Fe, plus several parts of Mogiana in Sao Paulo and multiple regions across Parana (MORE–SOMAR story coming up SHORTLY)

Screen Shot 2016-06-15 at 10.14.29 AM
Photos from coffee growers in Piraju, Sao Paulo, near Ourinhos, June 14th, 2016

Screen Shot 2016-06-14 at 11.19.20 AM
Photos by Coffee Agronomist André Luiz Cornélio, June 12th, 2016, in Pinhalão and Ibaiti, Parana

Frost Damage Reports Increase From Many Parts Of Brazil’s Key Southern Minas Coffee Belt
JUNE 14;
*FROST DAMAGE REPORTED IN SOUTHERN MINAS’ MUZAMBIHNO, 12 percent of some farms hit.
*FROST DAMAGE CONFIRMED IN PARANA, Coffee plantations hammered by freeze over the weekend
*Damage to coffee also reported in Cabo Verde, Tres Coraçoes, Pocos de Caldas and Parana, while field research is underway in Cabo Verde and Divinolandia
*Traders and growers say situation aggravate severe losses occurred from unseasonal heavy rains in May.
*Coffee Growers say crop WILL be lost in 2016-17 harvest and next 2017-18 crop also to be affected
*Brazilian agronomists CONFIRM all statements reported by SpillingTheBeans AND say damage to coffee might not show for another 2-3 days as trees usually start react within a few days after frost first hit.
*More details, comments, pictures, sources and details coming up shortly! (MORE)

Screen Shot 2016-06-14 at 9.27.20 AM
Photos by media group and newspaper Grupo Globo’s Sul de Minas team, June 14, 2016, in Muzambinho

Brazilian agronomist Aline de Freitas Veloso, a technical adviser at the Agricultural Federation of Minas Gerais (FAEMG), told local news in Southern Minas that multiple coffee regions across Southern Minas “have been affected by the intensity of the low temperatures” and the last four days of coffee frost — which starts to affect the coffee plant at +4˚c — have already also caused damage to coffee in many parts of Sao Paulo and coffee region in most of Parana. This latest wave of damage comes AFTER over a month with extreme heavy rains and strong winds which led to “large-scale losses” as mature or near-mature cherries fell to the ground and because of the continued rains many growers were not able to collect this coffee which was left on the ground to rot and ferment.

“With the incidence of the winds and frost, we have had losses of both coffee quality and of crop. The ice burned the trees and the fruit have fallen (to the ground),” he told local news providers Em.com.

In the Southern Minas municipality of Camanducaia, Monte Verde, in Poços de Caldas and Maria de Fe (about 100km south-east of Poços) temperatures fell to as low as -2.9, -2.3 and -1.7˚c respectively at dawn Monday, reaching the lowest levels after four days with frost, said Luiz Ladeia, meteorologist of Brazil’s National Institute of Meteorology (INMET) in the story.

See the full story here:http://www.em.com.br/app/noticia/gerais/2016/06/14/interna_gerais,772350/resfriamento-do-oceano-leva-a-queda-de-termometros-em-minas-gerais.shtml

Arabica Prices Rise As Brazil Frost Strikes Brazil’s Key Southern Minas Coffee Belt, Some Damage Reported
*Sep Arabica coffee prices are now UP 1.60 cents at 140.45/lb on continuing frost fears in Brazil with market activity brisk! (10:55a.m.EDT) –July prices settled up 0.35 cent at $1.3730/lb. Technical trading for market players switching positions from the soon-to-expire July contract to September weighed heavily on trade but the Brazil frost concerns kept the market in upward terrain.

JUN 13, 7a.m. EDT–Update:
*Parana’s Agronomy Institute reports ALL state’s growing areas were hit with “conditions that is damaging to coffee” at dawn on Sunday and urges frost prevention of trees where possible as cold front will persist. A team is currently investigating the state of crop and trees.

“O Instituto Agronômico do Paraná – IAPAR e o Sistema Meteorológico do Paraná – SIMEPAR, alertam que há previsão de geadas na madrugada de domingo (12) com condições de danificar os cafeeiros novos em toda área cultivada no Paraná, devido à intensificação da massa de ar polar.”

Screen Shot 2016-06-12 at 11.13.38 AM
(Archive Photo)

BREAKING: Frost Strikes Brazil’s Key Southern Minas Coffee Belt, Damage Reported As Frost Alert Extended For 4 Days

JUN 12 (SpillingTheBeans)–Brazil’s key coffee producing region of Southern Minas has been hit with damaging frost this weekend with farms and locations across the state reported to be affected by the intense cold, weather experts and industry officials confirmed on Sunday. Key coffee regions in the neighboring coffee state of Sao Paulo also reported near freezing temperatures, while frosty weather has prevailed in the southern-most coffee state of Parana since last week.

Southern Minas alone accounts for 50 percent of Brazil’s total annual coffee harvest, while Sao Paulo in an average crop cycle produces between 5 and 6 million 60-kilogram bags and Parana is home to between 1.1 and 1.6 million bags Arabica coffee.

The worst hit coffee areas in Southern Minas and Sao Paulo reported temperatures as low as 1°C and at least seven major coffee regions within Southern Minas and Sao Paulo reported temperatues between 3°C and 4°C. Frost damage to coffee starts to occur at between 3°C and 4°C when mature coffee cherries on trees start to burn and young trees up to 2 years of age can wilt and die.

“The cold weather started between Thursday and Friday in some parts of Sao Paulo and Parana, and on Saturday we registered temperatures between 3 and 4 degrees in a number of locations in Southern Minas. This is very cold for coffee and within the range where damage is likely to occur,” a coffee meteorologist at Brazil’s weather forecasters Somar told SpillingTheBeans by telephone from Sao Paulo.

Temperatures at dawn Sunday were reported as low as 2°C in Guaxupe, home to the world’s largest coffee cooperative of Cooxupe, while Poços de Caldas on the border between Sao Paulo state and Southern Minas registered 1˚c on Sunday. In both Tres Coraçoes, Muzambinho and Cabo Verde Sunday’s lows fell to 3˚c, while in nearby Varginha, Alfenas, Nova Resende and Tres Pontas temperatures dipped to 5˚c for a second consecutive day.

In Sao Paulo, the coffee region of Franca registered just 4˚c and in Espirito Santo do Pinhal temperatures fell to 3˚c. In southern Parana state temperatures were registered between -3˚c and 4˚c, all deep within damage territory for coffee frost.

“This mass of polar air pushing through the entire southern region all the way up to Southern Minas is really intense and the temperatures today have been even colder than predicted. It’s extremely intense and there is definitively a risk for damaging frost in Southern Minas,” said the Somar official.

The impact on the new 2016-17 harvest is aggravated by the fact that the extreme cold weather already has occurred for several days in a row, with some areas already reporting 3 or 4 days with intense cold which makes coffee even more vulnerable to damage. Damage can start at temperatures between 5°C to 6°C if the coffee is exposed to such cold weather for an extended period of time.

Producers in both Southern Minas and Sao Paulo’s coffee area of Pocos de Caldas reported damage, saying in a number of farms young trees have died and will require replanting.

“The cold weather has been terrible for coffee. We already have reports from the field of areas with young trees that have died and a lot of cherries that had fallen to the ground because of the heavy rains in May now cannot be saved after the frost,” said producer Elina Soares who has a small farm in Pocos de Caldas next to Santa Alina.

In the Southern Minas coffee municipalities of Tres Coraçoes, Guaxupe and Muzambinho temperatures fell to as little as 2˚c and coffee was exposed for between 7 and 10 hours to damaging temperatures.

“We are monitoring the situation very closely and are in constant contact with our growers, but we already know of some producers who have reported damage to both young trees and some crop,” said an official at the Cooxupe cooperative, adding: “This is not good for coffee and with the frost continuing for at least 2 more days we are extremely concerned”
(MORE)

*This story will be updated as new information is confirmed. For more on the current frost alerts and detailed maps of the regions covered, please see:
http://spilling-the-beans.net/market-insight-intense-coffee-frost-alert-to-prevail-over-brazils-southern-minas-through-june-16th/

  Share...

Share This Article

16 Comments

  • Timely and informative breaking news. Tyu for your dedication to the KC industry

  • I hav followed Coffee fundamentals very closely from 07/14 and you are the only one giving true picture. Market will prove you VERY right! Thanks for doing such a great job on the coverage!

  • Dear Maja,
    Thank you for your many tweets on Brazil frost. I believe you need to offer your readers an explanation of what the damage is to coffee trees and beans when temperatures are cold and near freezing but not below freezing. I am in contact with traders and coffee farmers and it seems they disregard any impact that doesn’t include an actual frost. You have mentioned that the beans on the tree can be damaged but I imagine these are small quantities that the market will likely ignore. The other damage that you speak of, is to the buds that will flower in the spring? Regrettably traders will be slow to embrace any damage which doesn’t include ice or brown leaves:) I don’t doubt that this weather is stressful for the trees and there most likely will be more to come. By the way I found the talk you did in Germany more than a year ago very informative for pointing me to the research on the correlation between price and stocks. I’m looking forward to seeing the theory tested out in coffee in the next 12-18 months!

    • Dear Morris, thanks for your detailed comment and various replies, it’s always great to have an active debate about these issues. And thanks for getting in touch, I lost all my email contacts shortly after Germany as my account was stolen by Nigerian hackers. As for what kind of damage can be expected and how low temperatures affect coffee, I have made numerous references to this, how damage typically starts at 4˚c where cherries and be “burned” and young trees can die, how even at temperatures of 5 or 6 ˚c damage can occur if coffee is exposed at longer times. Buds of course also can be damaged but at this stage of harvest there is very limited flowering BUT if young trees die or are damaged, they will have to be replanted and that affects next years’s harvest, so it’s both current and next in play. I agree the market reaction is likely to be slow as traders in today’s highly vulnerable market wants to see evidence before they react — i.e. I started writing about the drought in Vietnam in Feb and it wasn’t until May the market “suddenly” realized the damage was real. As for the current situation in Brazil, we will definitively have damage, probably limited to isolated areas in Southern Minas, a bit bigger isolated pockets of damage in Sao Paulo and Parana could be quite substantial depending on how well growers were able to prepare before the weekend. But even if the damage is small, it’s yet another blow to an already extremely precarious supply situation with Vietnam facing its smallest crop in 10 years, India the smallest in 20 years, Indonesia AGAIN hit by drought and unlikely to get even close to 10M bags, Colombia starting to see impact on biennial crops after replanting PLUS also suffering from El Nino in the southern zones that today account for close to 50 percent of the total areas, East Africa is AGAIN having drought and Central America, Mexico and Pero has with the sole exemption of Honduras STILL NOT been able to recover from rust. Add on this the prolonged impact of 3 years of drought in Brazil — 4 crops in Espirito Santo — and trees and farms, al bight producing a good harvest this year is NOT even close to a record. I covered the entire producing region of Minas Gerais and parts of Sao Paulo on my recent trip (just back 2 weeks ago), traveling near 3000 km by land and I didn’t see a single farm or region where there was not notably damage from the frost with 10-15% of branches not in production! And on top of that comes the excessive rains in May, which is some regions have caused up to 50% of new crop to fall to the ground. Some of this coffee has been recovered al bight quality is terrible, but a lot of this coffee will now NOT be recoverable due to the frost. In short, this frost, however limited the damage might result in, will be the final blow to an already troubled harvest in Brazil! Talk to you soon and thanks for your comments again 🙂

  • Dear Maja,
    Check this out they are claiming the cold will improve bud setting
    http://www.coffeetradersforum.org/webbbs/images/main/pic36977.jpg

    • Dear Morris, Just saw this report, and it is HIGHLY disturbing how incredibly bogus and biased it is. It’s been many years since World Weather Inc was on top of coffee — way back to my early days at Dow Jones — and this just goes to confirm this; Coffee was NOT exposed to frost only for “a very brief period of time” but for a full 7-10 hours in several key locations like Guaxupe, Tres Coracoes, Muzambinho and Cabo Verde, all HUGE coffee regions in Southern Minas. They clearly have lost their grip on coffee and shows little understanding of how coffee frost actually works in practise, i.e. like the fact that temperatures DO NOT have to actually hit freezing before damage can occur, but starts at +4˚c and vast parts of Southern Minas were below 4˚c for most of the night until 8am. That’s a very long time for coffee to be exposed to what in coffee constitutes frost. It’s sad to see how they deliberately try to talk it down, especially when this cold front will continue for most of the week, but they are clearly trying to keep their trader-clients happy regardless of the reality!

    • Hi again Morris, I couldn’t help to notice that just today news broke of major frost damage in many parts of Muzambinho, one of the exact locations I mentioned as where coffee in several parts of the municipality had been exposed for VERY long time — and not just a brief period as stated by World Weather — essentially confirming that my reports and sources have been right and World Weather wrong. It’s sad to see such blatant attempt of market manipulation as we today have been receiving pictures from across the producing regions in Southern Minas, Sao Paulo and Parana showing very evident damage to coffee. Just wanted to follow up! Best regards, Maja

  • Thanks Maja for all this accurate info! We appreciate all the leg work and effort you put into the analysis of Coffee markets. I think the most important point is even if BZ, Vietnam and CentAM faced zero weather issues, and produced 100% of their natural potential; the world would still consume every bean, with nothing left over. The frost and upcoming La Niña will only make the situation more dire.

    • Thanks very much for your kind comment Anthony, it’s much appreciated 🙂 I agree that even if the total losses at the end of the harvest might not be more than 500K-1M bags, its losses that the market can not afford with so many multiple weather problems across the world’s leading producers in the 2015-16-17 crop cycles, even Rabobank is now acknowledging that! The market is in an extremely precarious situation and this is only making matters worse!

  • Thank you, Maja, for all of your efforts to bring accurate information on what’s going on in the coffee market. I have friends who live in Brazil who are involved with coffee growers. They have confirmed all of your coverage of the frost damaging the crops to be true. You are the only one who is accurately reporting and giving the true picture. Unfortunately, there are those who have a vested interest in manipulating the coffee market for their own gain. I highly commend you for doing a great job! THANK YOU!

    • Dear Camille, thanks for this very kind comment, I will make my very best to keep up! Best regards 🙂

  • Dear Maja. My comments are just the truth! You are one of the very few with enough courage to report what’s really going on. Please keep up the great work you are doing! 🙂

    • Thanks, I will do my very best Camille 🙂 … some traders have already complained that my reports are “sensationalistic” as they refuse to accept the obvious facts while trying to stock up on coffee as cheap as possible, SO manipulative!

  • Dear Maja, I am a coffee planter in Chikmagalur, India. I was one of your followers on spilling-the-beans.net for past 6 years (on Twitter) and the website since 3 years. I was in regular touch with the news, as you were stating that the world Coffee production in crisis. I was wondering at the time if all the reports could be true. Now the reports, ven what you published all the way a year or two year back are proving very much true. As it is evident from the reports of other publishers. I am really grateful for your sincerity. You are doing a great job in the field of coffee.

    • Dear Vishwanath, thanks for your kind message 🙂 I have continued to say that — even when many traders have said that my reports were being “sensationalistic” — that time, sadly, will probe me right, and as it is increasingly becoming evident today world coffee production IS in crisis. Please do come back here regularly as I will continue to write about all the developments. Kind regards, Maja

Leave a Reply

Your email address will not be published. Required fields are marked *