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Enron Mail |
Excellent work. Thanks for the update.
Jeff Robert Johnston 01/11/2001 12:50 PM To: Jeffrey A Shankman/HOU/ECT@ECT, Gary Hickerson/HOU/ECT@ECT cc: Scott Tholan/Corp/Enron@Enron, Rommel Aganon/Corp/Enron@Enron=20 Subject: Brazil coffee estimate: latest @35mm After weeks of media reports and official Brazilian govt forecasts of a 25-= 27=20 million bag crop, we are finally getting to the real likely crop figure of = 35=20 million bags, which we forecast in mid-November (see report below the Dow= =20 story). I believe that this is the kind of information that can be a real= =20 winner for the EGM Agricultural traders by clarifying the confusing and=20 misleading reports from Brazilian official sources. RJ ---------------------- Forwarded by Robert Johnston/HOU/ECT on 01/11/2001= =20 11:28 AM --------------------------- =20 =09 =09 =09From: Rommel Aganon @ ENRON 01/11/2001 10:19 = AM =09 To: Robert Johnston/HOU/ECT@ECT cc: =20 Subject: Brazil coffee estimate: latest @35mm Robert, we hit another one on the head. =20 -- DJ MARKET TALK: Brazil 01-02 Coffee Crop Seen Near 35M Bags -- =20 Contact us in London on 44-20-7842-9358 or in New York on 201-938-4435.= =20 =20 1614 GMT (Dow Jones) Brazil 01-02 crop seen in 35 million bag range, says trader. However, much too early to put a firm figure on it with possibility= of weather, other upsets, he adds. (CHH)=20 Confidential Enron North America Competitive Analysis & Business Controls TO: Gary Hickerson FROM: Robert Johnston=20 CC: Erin Willis, Elsa Piekielniak, Vince Kaminski, Scott Tholan RE: Brazilian Coffee Crop Forecast DATE: 06 November 2000 1. 2000-2001 Crop This crop flowered from September 1999 to January 2000 and was harvested fr= om=20 April 2000 to November 2000. The peak of the harvest occurred in June/July.= =20 The 2000-2001 crop is currently being exported, and exports from the crop= =20 will continue into the first half of 2001. The consensus from our sources = is=20 that this crop will be bigger than expected and total 32-33 million bags. = =20 Brazil=01,s Ministry of Agriculture (Embrapa) is expected to release an off= icial=20 total in the next 10 days, which may or may not be accurate. The most rece= nt=20 government forecast called for 28.9 million bags. Growers have been issuin= g=20 similarly lower crop yield estimates for 2000-2001 as a way of calling=20 attention to a probable bad harvest and pressuring the government to provid= e=20 more generous financing subsidies. The current dry weather impacts the 2001-2002 crop, not the 2000-2001 crop,= =20 which is largely harvested. Crop receipts issued by cooperatives in Brazil= =20 are 11 percent greater than they were in 1999-2000. Our top source in=20 London believes that the 2000-2001 crop has been largely discounted by the= =20 market and that the focus should be on 2001-2002. 2. 2001-2002 Crop This is the crop that should be currently flowering in Brazil, but was=20 impacted by the June frost and the October dry weather. The harvest for th= e=20 2001-2002 crop will run from April 2001 to November 2001 and will be export= ed=20 in the second half of 2001 and in the first half of 2002. The Brazilian=20 government is likely to release its 2001-2002 forecast in December or Janua= ry=20 2001. The 1999 plantings garnered expectations of a 2001-2002 crop yield o= f=20 44-46 million bags. However, recent weather problems have caused a=20 significant downgrade of this forecast to between 33 and 40 million bags. Other sources in contact with coffee growers in Brazil report the potential= =20 for even greater damage to the 2001-2002 crop, in the range of up to a 50= =20 percent drop, or 22-23 million bags. Agronomists from Cooxupe, the largest= =20 coffee cooperative in Brazil, have already pegged their first estimate at= =20 27.8 million bags. Again, however, it is critical to remember that growers= =20 tend to exaggerate weather damage, which is then further exacerbated by=20 market rumors. As evidence, dry weather in the spring (Sept-Dec in Brazil)= =20 of 1999 caused alarm regarding the 2000-2001 crop. Even though the dry=20 weather did not end until December 1999, there was still time for flowering= ,=20 which caused many market watchers to upgrade their forecasts. While analysts and growers agree that the highly irregular status of the=20 coffee trees makes the 2001/2002 crop one of the most difficult to evaluate= ,=20 the occurrence of average to normal rainfall will greatly sharpen crop=20 forecasting efforts. It is most critical for the rest of November and=20 December. Recent rains since the last week of October have begun to addres= s=20 the hydrological deficit in the soil. Continued, steady, well-dispersed=20 rains will help offset losses, but estimated irreversible damage to the=20 expected yield of 44-46 million bags from frost and dry weather to date wil= l=20 be a minimum of 15 percent, making the new yield forecast no greater than= =20 38-40 million bags. A shortage of significant rainfall between now and the= =20 end of December could bring yield down to a 30 percent loss from the=20 forecast, in the range of 33-36 million bags. Rain is particularly significant because the new planting in recent years h= as=20 been concentrated in the Cerrado (savannah) region of Northern Brazil. The= =20 coffee can be mechanically harvested in this region, but requires significa= nt=20 irrigation. The irrigation alone will only partially offset the dry=20 weather. =20 The frost damage from June 2000 accounts for a 75 percent crop loss in Para= na=20 and a 20 percent crop loss in Sao Paulo, but these states only account for = 20=20 percent of total Brazilian production. In Minas Gerais (almost 60 percent = of=20 production), the crop losses are only 10 percent. Crop losses in Espiritu= =20 Santo, which accounts for 10 percent of production, have been negligible. Our sources will monitor rainfall and flowering/cherry formation on the=20 coffee trees, which must occur by January 2001. The recent rainfall is=20 viewed as promising and supports our basis for a 33 million bag estimate.
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