Brazil Coffee - Growers meet in bullish mood

By Peter Blackburn

RIO DE JANEIRO, Brazil, Aug 29 (Reuters) - Brazilian coffee producers, with more than 85 percent of an excellent crop harvested, were gathering in Belo Horizonte on Tuesday feeling bullish about the market outlook.

Nestor Osorio, executive director of the International Coffee Organization, will open the three-day meeting in the capital of Brazil's biggest coffee producing state against a backdrop of tight stocks and much smaller crop next year.

"We want to discuss the sector's future and to improve coffee policy planning," said Mauricio Miarelli, president of the producers National Coffee Council (CNC).

An exceptionally dry Brazilian winter fanned speculation that coffee trees, tired after a large harvest, would produce a poor flowering in September for next year's crop.

However, traders said that lack of autumnal rain in March and April and higher than normal winter temperatures were mainly responsible for stressing coffee trees.

Last Friday, the government as expected slightly revised up its estimate of the current harvest to 41.57 million 60-kg tags, a 26 percent increase on last year.

Light rain last weekend in coffee areas of Minas Gerais and other parts of the southeastern coffee belt dampened speculation about a poor September flowering and triggered a decline in New York Board of Trade (NYBOT) futures.

As a result, domestic physical trading was subdued.

"Producers are only selling enough coffee to settle their bills," said Santos-based broker Eduardo Carvalhaes.

HIGHER AUG SHIPMENTS

But despite a shortage of containers and disputes over shipping and handling charges, export registrations between Aug. 1 and 28 totaled 2.32 million bags, 41 percent higher than 1.65 million bags at the same time last month and up 13 percent from 2.06 million bags in August 2005.

Swedish quality arabicas for Sept/Dec shipment were unchanged at -20/-18 cents a 1b under New York futures.

"Even when it's quiet a lot of business gets done," Carvalhaes said.

A Rio de Janeiro based broker added, "It's stalemate. Producers are confident that prices will rise while buyers refuse to pay up because they believe there's a lot of selling to come."

Despite the harvest, good quality, hard cup arabicas were quoted at 245/250 reais per 60-kg bag, up 5 reais from last week.