Marex Spectron, saying that funds are "too short, too soon" in arabica beans, flagged the prospect of a recovery in coffee prices, despite becoming the second commentator this week to raise estimates for world supplies.
Coffee prices are "towards the bottom of a range", the London-based commodities house said, flagging the squeeze on world supplies from a reluctance by Brazilian farmers to sell, after a harvest depressed in 2017 by being an "off" year in the country's cycle of alternate higher and lower producing years.
"Brazil is not a seller, reflected in Brazil exports being historically slow and differentials being very firm," Marex said. "The supplier of 32% of the world's coffee doesn't like the price."
'Battle' between producers and funds
Indeed, Brazilian coffee growers - "well financed" after a period of selling stocks at time when domestic prices have been supported weakness in the real – have a "genuine choice" between selling or rebuilding inventories in the hope of higher values.
"At this price, [the farmer] will build stock," Marex said. This will put pressure on funds, which "are too short, too soon and at the wrong price".
According to latest data from the Commodity Futures Trading Commission, managed money, a proxy for speculators, held a net short of 40,511 lots, not far shy of the record high of 43,619 contracts set in June.
This net short position "is too big and vulnerable", said Marex, adding that it was lining up "behind the Brazilian farmer… in this battle" between producers and funds. The fund short position "should provide the catalyst for the move higher" in prices.
Supply hopes raised
The comments came even as the group raised by 1.1m bags, to 2.0m bags, its estimate of the world production surplus in 2016-17, and halved to 2.2m tonnes its forecast for the output deficit this season.
The revisions reflected largely improved ideas on output in Vietnam, the top robusta-growing country, where last season's crop was upgraded by 500,000 bags to 25.0m bags, and the forthcoming harvest by 1.0m bags to 29.0m bags, following "excellent rains".
On Tuesday, Rabobank also raised its estimates for world coffee supplies, seeing a 1.1m-bag surplus in 2016-17, compared with a previous figure of a 200,000-bag deficit, with the change attributed to "changes in Uganda and some smaller origins". For the current marketing year, the bank cut by 1.2m bags to 4.9m bags its deficit forecast. Marketing years are typically seen as running on an October-to-September basis.
Record Brazilian harvest ahead?
Marex Spectron, despite its sanguine comments on coffee prices, flagged the potential for a large Brazilian harvest in 2018-19, potentially of 65m bags if weather proves perfect. The arabica harvest could reach 48m-50m bags, and the robusta crop 15m-16m bags.
"But we will not know until January-February," the group said, adding that "the world needs Brazil to produce a record crop".

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Coffee market guru Carlos Brando urged Brazil's industry to tackle the threat of climate change, as he cautioned over stagnation in the country's output, and of a "new drought" in the top robusta-growing state.
Mr Brando - director at marketing and trading group P&A Marketing, and advisor to the likes of the World Bank and International Coffee Organization – said that the march north by Brazil's coffee growers from the frost-prone south had made climate a "much greater threat and challenge" to output.
Indeed, "higher temperatures and changes in rainfall patterns have become much more important indicators of actual crop size" than before production switched from southern areas such as Parana, also a major wheat growing state, to the likes of Minas Gerais, better known for sun-needy corn.
And weather setbacks have been evident in a slowdown in Brazilian output particularly evident when smoothing out year-to-year volatility by analysing data on a multi-year average basis.
As measured on a four-year average basis, Brazilian output - after a "long pattern of growth" from levels around 30m tonnes at the start of this century - has been on a gentle decline, to some 46m bags, since hitting a high in 2013.
'Another major challenge'
The trend "indicates show production in the last three crops reacted to climate change", said Mr Brando.
Tackling the "problem" may require not just the introduction of drought-tolerant coffee trees, which researchers are working on, "but a wider integrated approach" involving the broader use of irrigation and shade trees, as well as changes in harvesting technology.
"If recent history is a guide, the Brazilian coffee business will react positively to yet another major challenge," he said. But the output retreat suggested by the fall in Brazil's four-year average production "indicate that this has to happen soon".
'Drought alert'
Already, weather setbacks had undermined Brazil's 2018 coffee production prospects, with Mr Brando flagging the failure of follow-up rains in parts of Minas Gerais, the top arabica-growing state, after initial rainfall which prompted "intense flowering".
With the reversion to dryness lowering the proportion of blossoms likely to developing into cherries, "experts claim that the production potential has already been reduced, also because coffee trees now have fewer leaves due to the heat".
Meanwhile, in Espirito Santo, the biggest robusta growing state, reports suggest that "a new drought may be brewing after a period of rains. "A drought alert should be in the radar screens of experts who estimate the Brazilian crop."

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• Inadequate trade data is hindering free flow of goods and services in Africa
• Database is being created for countries in eastern and southern Africa
• It could spur agricultural productivity and improved livelihoods, say experts
Inadequate access to trade data has hindered free flow of goods and services in fields such as agriculture and health among countries in East and Southern African, experts say. However, this could be in the past with plans to set up a transparent and easily accessible database containing countries’ information on trade and markets in the two regions.

This was revealed by experts gathered in Nairobi last week (10-11 July) for a capacity building workshop where experts from ten countries were trained on how to organize and present data on trade in online portals that can be accessed by people such as farmers and businesspersons. “We want to ensure critical information on trade is easily accessible to the business community.” Said Mukayi Musarurwa, from COMESA

The database, termed as an innovation to reducing barriers to free trade in Africa, will have data from 26 countries that make the tripartite free trade area of the Common Market for East and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC).

It will use the non-tariff barrier (NTB) mechanism that involves online and short message reporting information and communications technology tools supported by national and regional bodies that represent the public and private sectors. “We are here to help nations on how to develop information portals and a database on trade,” says Vonesai Hove, NTBs component manager of the Tripartite Capacity Building Programme.

Hove says that under the programme, member states will receive financial and technical support to develop database that will contain information on countries’ prerequisites for trade. Such information, she says, will help traders adhere to health and environmental care standards, for example, as required by countries.

The training involved ten countries: Botswana, Egypt, Kenya, Malawi, Rwanda, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. The initiative is funded by The African Development Bank contributing US$7.5 million grant whereas the United Nation’s Conference on Trade and Development is providing technical assistance to the member states in COMESA, EAC and SADC regions for the project.

According to Mukayi Musarurwa, standards quality assurance consultant from COMESA’s secretariat, the region has accessible trade data thus hindering easier flow of goods and services between countries. Musarurwa cites livestock products such as milk that go to waste because businesspersons have inadequate information on the requirements for importing and exporting the product.
“We want to ensure critical information on trade is easily accessible to the business community,” Musarurwa tells SciDev.Net, adding that, the database will contain information on the requirements businesspersons to export and import goods and services. For instance, such requirements, he says, includes packaging and labelling requirements for particular countries. The database is currently being developed is expected to be available as soon as it is completed, according to COMESA secretariat.

Japheth Mutinda, a Kenya-based farmer and agribusiness man, says that using modern technology to build such a database would help increase trade and spur agricultural productivity, especially for farmers.

“I harvest a lot of vegetables, onions and watermelons but they usually go to waste because of a limited local market,” says Mutinda, explaining that access to information on requirements of countries will help him and other farmers find and sell to an increased market, and thus increase productivity, which could create jobs and improve livelihoods.
Extracted from SciDev.Net’s Sub-Saharan Africa English desk.

One year into an historical free trade agreement which significantly increased access to the world’s largest market, South Africa has fallen far short of exploiting its full new quotas of duty-free agricultural exports to the European Union.
Trade and Industry Minister Rob Davies promised on Tuesday to tackle problems thaf have prevented agricultural exporters from meeting quotas negotiated by South Africa as part of the “SADC-EPA” – the Economic Partnership Agreement between the EU and six southern African Development Community countries – which went into force a year ago.

At the time, Davies hailed his government’s achievement in negotiating an agreement for significant increases in quotas of South African agricultural exports to the EU.
These included a quota of 150,000 tons of sugar exports and 80,000 tons of ethanol – where no South African exports had been allowed before; an increase in the quota of wine exports from 50-million litres a year to 111-million litres, as well as substantial increases in quotas on exports of raw and canned fruits and fruit juices. But it emerged at an EU-SADC seminar in Johannesburg on Monday that only 44.4% of the increased wine export quota, only 7.8% of the new sugar quota and only 11.4% of the ethanol quota had been used.

None of a 500-ton annual duty-free quota of skimmed milk powder, a 500-ton annual duty-free butter quota or a 385-ton annual duty-free strawberry quota had been used, according to Mlamli Mjambana of South Africa’s Department of Agriculture, Forestry and Fisheries. None of a 100-ton annual quota of citrus jams or of a 3,020-ton annual quota of canned tropical fruit – both with tariffs of 50% of the so-called MFN (Most Favoured Nation) standard tariff – had been used by South African exporters.
And they had only used about 5% of an apple juice quota at 50% of MFN and some 44% of a non-tropical canned fruit juice quota at 45% of MFN, Mjambana said. The most successful export under the SADC-EPA has been frozen orange juice where the entire annual, duty-free quota has been used by South African exporters. EU trade commissioner Cecilia Malmström blamed most of the failure of South African exporters to take up the EPA quotes on ignorance about the opportunities and said that together the EU and South Africa should launch a campaign to inform businesses of these opportunities.

However, Mjambana mainly fingered so-called SPS – Sanitary and Phyto-sanitary – issues as the main culprit. These are the health and safety standards which the EU, like other trading partners, maintain on imports to protect the health of their consumers and their own agricultural products.
Mjambana said that his department was partly to blame for this because it had not yet negotiated SPS agreements with the EU to get round the health and safety concerns. He cited the zero exports of skimmed powdered milk as an example where this had had a major effect. He also cited other causes, such as a drought which had hit production of strawberries, for the zero uptake of that quota.

Davies said he would like to hear from producers what their problems were in exporting to the EU. He noted that even before the EPA came into effect, South Africa had had a big problem exporting citrus to the EU because of the presence of the black spot fungus on the skins of South African citrus.
“If our producers are not taking up their export quotas we need to see what it needs to meet the EU standards. If these are unfair we will address them,” he said, adding later that sometimes ostensible SPS issues were in fact disguised trade protectionism. Malmström agreed with him that all parties – not just South Africa – had to be vigilant to ensure SPS issues were not used to simply protect domestic producers from genuine competition.

Extracted from the Daily Maverick

The government of Sweden is contributing SEK 500,000 (approximately CHF 60,000) to assist the participation of least-developed countries (LDCs) in the eleventh WTO Ministerial Conference (MC11), which will take place on 10-13 December 2017 in Buenos Aires, Argentina.
Director-General Roberto Azevêdo said: “Sweden's donation will be essential to ensure that the LDCs' voice features prominently in global trade negotiations, thereby helping more people to leverage the opportunities that international trade offers. I welcome Sweden's generosity.”
Sweden's Ambassador, Daniel Blockert, said: “Sweden remains strongly committed to promoting the active participation of LDCs in the multilateral trading system, including at WTO Ministerial Conferences. We believe in inclusive trade so that all nations, all businesses and all citizens have the opportunity to gain from an economic tool that is essential for growth, development and elimination of poverty.”
Overall, Sweden has donated more than 3 million to WTO trust funds this year.
Extracted from WTO